Anyone in the market for a new car has seen those great advertised deals on new car leases. They go something like this; “new 2016______$299/month, no money down for 36 months.” Someone in the market for a new car gets excited. Sounds like a great deal. Too good to be true. Unfortunately these lease deals are often too good to be true. Car advertising while not illegal, is the worst kind of misleading advertising because it truly is misleading, telling only a fraction of the story. Here are the facts.
First, if you’re driver who uses a car for work or more than just on weekends, it’s important to understand that advertised leases are all based on 10,000 miles per year of driving. So If you require 12,000 miles that’s an additional 2,000/year or 6,000 miles over a 36 month lease. The average car company charges $.25/mile which equals $1,500 or an additional $42/month in the case of a 36 month lease. The $299 lease is now $341.
Second, lease offerings are based on above average credit which not everyone has. If you walk into a dealership with a credit score under 700, the deal is going to look a lot different than if you have a credit score over 750. That of course is up to the individual. He or she needs to be aware of what kind of credit they have. Remember, leasing, like purchasing, is based on a finance rate which is based purely on your credit worthiness.
Third, leases are based on bare bones cars for the most part although that has changed over time. There are differences in standard offerings but the lease you see advertised will not include leather interior, navigation, the optional wheels, or any of the other optional offerings, which can raise the price of your monthly payment considerably. Navigation can cost as much as $3,000 or more in some cases and can add as much as $100/month to the price of a lease. That $299 lease is now $435.
Fourth, all of the offerings given when picking up your vehicle should be avoided. They are simply dealership revenue drivers but add little value. Don’t be pressured into an after market alarm or rust protection. The only possible exception is tire and wheel insurance if you’re leasing a car with low profile tires which can run as high as $500 per tire and wheels as high as $1,000 per rim. This is especially important in the northern states where pot holed roads are the rule, not the exception.
It’s important not to get emotional when leasing a new vehicle. Never chase a deal. Make an offer no matter how ridiculous it may seem. You might be surprised by the result. It’s called negotiating and few people do it well. Don’t be intimidated or believe the “I’m giving you the car at just $5.00 more than it costs me” nonsense. The dealer always has some room to negotiate. Remember the “let me talk to my manager” line? That’s all it is. It’s an old negotiating tool that all car dealers use. Be prepared to walk away. Car dealers never, ever want you to walk out of the dealership without purchasing a vehicle and that walk towards the door will go a long way towards securing the deal that works for you.