Know the important questions to ask before you lease a car. There are major differences between buying and leasing. However, the first steps in leasing are the same as those in buying a car.
Collect Information
- select the model you are interested in and record the identifying data
- at the dealership, negotiate a fair price for the car and get a price commitment on your trade-in
- ask the salesperson to have the agreement written up as a lease
Negotiate the Gross Capitalized Cost
Try to negotiate a gross capitalized cost somewhere between the MSRP and the dealer invoice price. The lower the cap cost, the better deal for the consumer. If the gross capitalized cost is too high, tell the salesperson to cut items that increase the total cost. If the salesperson claims that capitalized cost is a fixed figure and can’t be lowered, find another salesperson. Use the required disclosure form as a worksheet. On the form, compare the agreed upon value of the vehicle with the gross capitalized cost to see what charges have been added.
The law of supply and demand affects leasing as well as buying. If car sales are breaking records and the model you want to lease is a hot seller, expect to pay more. If the opposite is true and car sales are sluggish, bargain for a capitalized cost that represents a discount from the MSRP.
Filled in Disclosure Form
Ask the salesperson to fill in the disclosure form-front and back and give you the figures. Be sure that you check the box near the middle of the front page in order to get a step-by-step calculation of the monthly payment. At this time, lessors are not required to provide data on the money factor used to calculate the equivalent of the annual percentage rate of interest (APR) charged on vehicle loans.
Review the Disclosure Form
Review the disclosure form and ask for explanations of any items you do not understand. Make sure that the trade-in allowance reduces the gross capitalized cost. In the past, a common leasing complaint was that consumers were not given credit for the trade-in. To prevent this, scrutinize the line on the disclosure form titled capitalized cost reduction. The total amount should include rebates, cash down payment, and trade-in allowance. If you have paid a deposit, make sure you get credit for it.
Take the Lease Home and Study it
Once the lease is written, instead of signing on the spot, ask for an exact photocopy to take home and study. Given the importance of the document, the obscurity of its terms, and its legally binding status, a quick decision is not smart. If possible, avoid giving a deposit at this stage since there is no deal until you sign the lease.
Compare the Figures
At home, compare the figures on the lease with those on your disclosure form. Look for unexplained changes. Use your calculator to check the math. Verify the accuracy of the most important figures: lease term, gross capitalized cost, capitalized cost reduction, residual value, and rent charge.
A short-term lease, up to 24 months, means larger payments and more money spent for depreciation. A longer lease, up to 48 months, should have smaller payments, but may be less flexible. Experts recommend a lease length that coincides with the length of the vehicle’s warranty.