How to Get a Good Deal on a Lease

How to Get a Good Deal on a Lease

Leasing a vehicle vs buying is something we all decide on when looking for a “new” automobile. I am part of the Gearhead Commerce team, and I love all things related to cars. But I am not a true “hands on” Gearhead when it comes to being able to fix or repair a vehicle on my own. Yes, there are great reasons for buying a new car, but I don’t want to own a new car. So, I choose to lease. I also do not drive many miles each year and have always taken very good care of any car I’ve had since college. The last car I officially owned was a Ford Taurus way back in 1998. From that year, until the present, I have always leased a new vehicle every 3 years. It works for me. I enjoy getting a new car every few years. I have good credit. I put little, if any, real wear and tear on any vehicle I lease. I never have to worry about repairing or replacing anything if problems do come about. Which over 18+ years has rarely happened. Hey it is a new car. I’ve only been over my allocated miles one time, and just by a few hundred miles. And most of all I get a brand new car every few years for less money than I would if I purchased it.

First thing to do when searching out there to lease a new vehicle is to make certain you do your own homework. Know the “MSRP” of the car you want. Be sure to check the fair market “selling price” for the vehicle you wish to target. A more desirable car in the marketplace with a good re-sale history will carry a higher residual percentage. Know any and all rebates and/or lease specials for your region that will come with your vehicle. A great benefit with lease is you can get in a better, higher priced vehicle, at a cheaper monthly rate. If you have good credit, which you need to get a good lease deal, be sure you know your interest rate or what is called the “money factor”.

Once you are ready to start the vetting process choose 3 dealers to present to them your own lease sheet. Show them the car you want, the residual rate that you researched, a fair selling price, cap reductions (rebates, trade, etc), interest rate/money factor, lease term (ie: 36 months with 12,000 miles per year). Presenting your own sheet and looking professional, and confident, should make each dealer understand that you are not a customer who is looking to play a game of ping-pong with numbers. The sad thing is you will find out that 2 of the 3 dealers will try to say your numbers are wrong or that your calculations don’t add up. Don’t buy it. Believe me, if they want your business, and they realize you know the numbers and how to lease, you will work out a deal and be driving home in a new car in no time flat. The best way to present your sheet these days is probably through email.

A few tips below to remember:

  • Selling Price – This is negotiable. Don’t allow a dealer to say they lease off the MSRP.
  • Try to put down little to no money. Remember this isn’t your car. Any cash down is gone if you leave the lot and get in an accident, etc., you do not get it back.
  • Do not lease over 36 months
  • Make No disposition fee
  • Money Factor Number (you get this by dividing your interest % by 2400. Ie: 1.5% / 2400 = 0.000625)
  • Make $0 security deposit. If you have good credit this is not needed. And they know it!
  • Look out for title, registration, doc fee and other up-front costs. Most these may be a few hundred dollars combined. You can always put that money onto your final cap cost / negotiated final selling price of the car (Cap Cost).
  • Be sure you get the proper number of miles you truly need per year. If you need more that 10,000 – 12,000 miles your payment will go up a bit more a month
  • Get any and all rebates available. Returning customer, military, regional rebates, national rebates, early trade in from current lease, etc. All these credits will bring down the final Cap cost which will lower your monthly payment.

Below is a base calculation of how to work a monthly lease payment. I live in NC so you will see an added tax line of final monthly payment x .03.


Vehicle MSRP $35,000 with a residual of 53% and a 1.5% money factor.

Base Monthly Payment:
$35,000 (MSRP Price)
X 0.53 (residual %)
= $18,550 (Residual Value)

$31,000 (adjusted selling price / negotiated cap cost – includes all rebates, closing fees, etc)
$12,450 (depreciation over 36 months. Final Cap Cost minus Residual Value)
= $345.83 (Depreciation divided by term = monthly payment)

Money Factor Calculation:
$31,000 (Cap cost as above)
+ $18,550 (add the residual value)
= $49,550
$30.97 (0.00065 x $49,500. Final Monthly Money Factor based on 1.5%)

Final Numbers:
$30.97 (Monthly Money Factor)
$345.83 (Monthly Payment)
= $376.80
+ $11.30
(NC Tax rate of 3% x $376.80)

$388.11 total for final monthly payment for your new vehicle