10 Steps to Leasing a New Car
Make a Great Deal the Easy Way
Step 1: Get Acquainted With Leasing
Car leasing is really just like a car rental, but for a longer time period and with some extra fees. Many people prefer leasing to buying because it allows them to drive a new car for less money than if they purchased it. You should have a good idea by now which car to lease, thanks to "10 Steps to Finding the Right Car for You." If you are still undecided, review that article and then come back after you have made your choice. And in this first step, it also might be helpful to review some of the other pros and cons of leasing to make sure it is the right financing method for you.
The next steps will tell you how to locate and negotiate a good monthly payment for the car you want to lease. It will also introduce you to Edmunds Price Promise® Lease Offers, which will make the process much faster and stress-free.
Step 2: Design Your Lease Deal: Years, Miles and Insurance
Edmunds.com recommends that people lease for no longer than three years so your car will always be protected by the manufacturer's three-year bumper-to-bumper warranty. Some people are tempted to extend their leases to four and five years to reduce the monthly lease payment. But this means you're investing more money in a vehicle that will never be yours and might need costly repairs.
You should also know that most lease contracts include 12,000 miles a year. So if you drive more than 36,000 miles in three years, you will be charged 10-15 cents for each additional mile. You can buy extra miles up front, usually for 5 cents per mile and have this rolled into your lease payment.
Lease contracts usually call for an up-front payment called "drive-off fees." Often, advertised leases list high drive-off amounts. However, we recommend you pay only about $1,000 to start the lease. So to summarize, the Edmunds.com recommended lease is: three years, 12,000 included miles per year and about $1,000 in drive-off fees.
One last thing: It's smart to ask your insurance agent for a coverage quote. Lease companies require higher levels of coverage for leased cars than many individuals carry for cars they've bought. The lease company's liability is higher, and it passes this extra expense along to you.
Step 3: Estimate Your Monthly Lease Payment
It's a good idea to estimate a possible lease payment yourself so you can spot a good deal as you continue shopping. The formula is complicated, but with a little patience, it is possible to calculate your own lease payment. You also can use the Edmunds.com lease calculator to generate a payment and adjust it based on different parameters, such as mileage and down payment. To use the calculator, you'll first need to get the residual amount for the car. Call the finance manager at a local dealership and ask for the three-year residual value of the car you want. Put this figure into the calculator along with the mileage, down payment and trade-in to see your estimated monthly payment.
Step 4: Check for Manufacturer Lease Deals
Many carmakers periodically offer highly discounted lease specials. However, the advertised specials might have additional costs in the fine print of the lease ad. You should always check to see if the promised monthly payment includes sales tax and fees and if it also requires high drive-off fees, which are similar to a down payment when you buy a car. Check our Incentives and Rebates section and the leasing deals of the month for current offers.
Step 5: Look for Price Promise Lease Offers
Another way to get a great deal is to look for Edmunds Price Promise® Lease Offers. Go to the Edmunds.com home page, select a vehicle by clicking on the year, make and model, and you will see cars that are available in your area. Look for the box that says "See Lease Offer," provide your e-mail address and phone number, and you will immediately see the vehicle's monthly lease payment, drive-off fees and number of included miles. Call the salesperson listed on the offer to confirm the car is still available, then print out the certificate to take with you to the dealership.
Step 6: Find the Exact Car To Lease
If a Price Promise Lease Offer isn't available for the car you want, you can locate other cars to lease by going to the Edmunds home page and selecting the year, make and model. After you click "Go," the next screen displays several sample cars for sale at local dealers. In the upper left corner of the screen, click the link that lists the number of cars available, followed by "Cars for Sale" for a much longer list of cars in your area. If you are interested in one of these cars, contact the dealer to make sure it is still available. If there are several dealerships offering the same car, you may be in a better position to negotiate an even better lease payment.
Step 7: Solicit Quotes Through the Internet Department
We strongly suggest that you shop through the dealership's Internet department, which offers many advantages over the traditional car shopping experience. Using Edmunds.com, you can simultaneously send requests for price quotes from the Internet managers at local dealerships. After you receive the car price quote, you'll need to follow up with an e-mail or phone call to get a lease quote (using the factors of three years, 12,000 miles per year and $1,000 in drive-off fees) so you can do an apples-to-apples comparison. Now, compare the quotes you get to your own calculated lease payments or those you received from Price Promise lease offers.
Step 8: Review the Dealership and the Car Salesperson
As you call dealerships to locate your car, you should also test-drive the car salesperson. Ask yourself if you feel comfortable dealing with this person. Does he or she return your phone calls and answer your questions in a straightforward manner? Also, you should take a moment to read any available reviews of the dealerships you are considering.
Step 9: Negotiate Your Best Lease Payment
You now have a handful of price quotes (or even a Price Promise lease offer) and an idea of the level of customer satisfaction at the dealerships you contacted. If you want to try to improve the deal, take the lowest offer, call the other dealers and see if they can beat that price. If no one budges, you are at rock bottom.
Although we highly recommend using the Internet department, many people still go to the car lot in person to make a deal. If you do so, make sure to take along your lease payment estimates and price quotes. Also, download Edmunds.com's mobile car buying app for any last-minute pricing and inventory research. Then, if the salesperson's on-the-lot price is too high, you can show the prices you've gotten from other dealerships. But make sure you accurately compare quotes by matching the down payment, the length of the lease and the annual mileage allowance.
Whichever method you choose, it is a good idea to ask the salesperson for a worksheet showing all the numbers in the deal. This will reveal any hidden fees and allow you to compare this offer to the quotes you have. And make sure that the quote lease includes sales tax to see what your full monthly payment will be.
One more thing: Before you say yes to the deal, tell the salesperson you are willing to lease if the dealership will have the car delivered to your home or office. This will save you time and allow you to skip the step of visiting the finance office to hear about additional products, such as alarm systems and fabric treatments.
Step 10: Review and Sign the Paperwork
Whether you close the deal at home or at the showroom, the dealership will ask you to sign a contract and an array of documents. At the dealership, this will probably be done in a separate office by the finance and insurance (F&I) manager, who might offer you additional items such as prepaid maintenance plans, fabric protection, alarms or a vehicle locator. Some people might benefit from these extras, but determining a good price can be difficult. Read more about this in "Negotiating a Dealer's New-Car Add-Ons."
If you have already seen a worksheet for the lease deal you've made, the contract should be a formality. Make sure the numbers in the contract match the worksheet and that no additional charges or fees were added. Understand what you are signing and what it means. Remember, once you have signed, there is typically no going back to "unwind" the deal. And finally, make sure the lease contract you are signing includes gap insurance to protect you if your leased car is stolen or totaled in an accident.
Now it's time to go out and put your knowledge into action. Just remember that the time you take to research your leasing decision will pay dividends over the years. You'll not only be driving a car that suits your needs, but you'll be saving money in the process.