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I think I've found the car I want to lease. Well, I've narrowed it down to three cars, but there is a leading contender. But, I've never leased a car before, and don't know how to negotiate. A couple questions:
1) What parts of a lease are negotiable? If I was buying the car I would make an offer a little bit (few thousand) lower than the asking price, what is the lease equivalent of that?
2) Basically, I want to be able to say 'knock off $50 a month and we have a deal' or something similar, is that the correct approach?
3) It looks like the 'sweet spot' for the lease is around 29 months. Is that too short? Too long?
4) I'm guessing I won't want to buy the car off lease. Is there anything that can burn me when I'm turning it in?
I'm sure there's tons more I should be asking, so feel free to chip in with anything you've got, or share your leasing negotiation experience.
First of all, hope you close a deal on one of these cars.
1) The residual value and the finance charge (money factor) will be set by Porsche Financial Services, so technically there's nothing to negotiate on those numbers, though dealers are notorious for trying to mark up the base money factor (which should be .0020, or 4.8%). The real play is in the selling price of the car (i.e., the percentage discount).
2) That's the wrong approach. If you take this approach, the dealer will be able to use smoke and mirrors to get to the number you're leading him/ her to, such as by increasing the down payment, cutting the money factor a bit while still marking it up, or some other tactic. Know the applicable residual values and money factors and negotiate using the discount off MSRP. Someone posted a while ago a lease calculator spreadsheet that's super helpful.
3) Sweet spot depends on the relative residual values and how large the depreciation/ finance charge is that you have to amortize over the lease term. My lease is for 27 months, because that's how the numbers worked out best last summer.
4) They can nickle and dime you for damage/ excess wear and tear. Generally speaking, dealers are good with this stuff if you're leasing/ buying another car from them. Or so I hope. This is my first Porsche as well.
First of all, hope you close a deal on one of these cars.
1) The residual value and the finance charge (money factor) will be set by Porsche Financial Services, so technically there's nothing to negotiate on those numbers, though dealers are notorious for trying to mark up the base money factor (which should be .0020, or 4.8%). The real play is in the selling price of the car (i.e., the percentage discount).
2) That's the wrong approach. If you take this approach, the dealer will be able to use smoke and mirrors to get to the number you're leading him/ her to, such as by increasing the down payment, cutting the money factor a bit while still marking it up, or some other tactic. Know the applicable residual values and money factors and negotiate using the discount off MSRP. Someone posted a while ago a lease calculator spreadsheet that's super helpful.
3) Sweet spot depends on the relative residual values and how large the depreciation/ finance charge is that you have to amortize over the lease term. My lease is for 27 months, because that's how the numbers worked out best last summer.
4) They can nickle and dime you for damage/ excess wear and tear. Generally speaking, dealers are good with this stuff if you're leasing/ buying another car from them. Or so I hope. This is my first Porsche as well.
Good luck!
Good advice. Search "Edmunds forum Porsche 911 lease" to find out what the base money factor is. Usually around 0.0020 for 991's. Multiply by 2400 convert to percent. Dealers often mark this up. So you may find yourself negotiating to get the base rate. The depreciation is fixed and based on the term and mileage. There is a sweet spot on the term and mileage depending on what PFS is aiming for (has been between 24 and 36 months and 5k mi/yr). Also research base lease processing fees.
Use a car lease calculator like this one to make sure your negotiated price, money factor, term, and mileage all add up . . .
I once leased a Honda Civic from Honda of SF. We negotiated the all the terms. In the finance room the jack*ss lowered the mileage and raised the money factor to get to the same monthly payment. Another time I leased a Benz from MB of SF and they added $300 to the lease processing fee and a $700 transport fee because it was just delivered from LA even thought it was already on the lot. I told them I was in a rush to sign the docs and they pull that bs. The more variables, the more you can get screwed.
Have your numbers and calculator ready. If the numbers don't add up, walk.
This is the best advice. Don't get rushed, don't get fooled. Don't be afraid to walk out. That's the strongest defense that you have against them playing games.
I was working on a deal on a BMW, and I decided to lease it. BMW often has great subsidies on leases. Well, the dealer jacked up the processing fee. I complained about it, and they knocked a $100 off but otherwise basically laughed at me and said "too bad". On one hand, I had gotten a good price on the car, but on the other hand I really felt like they mistreated me on that.
Money factor was .00085
Discount was 10% from sticker
This was 2014 boxster s. Haggling might have resulted in deeper discount.
Another trick is getting you to put money down and magically payments get lower.
All that you are doing there is prepaying.
Technically you could do a one pay and your monthly payments would be Zero.
Negotiate the price just as aggressively as if you were buying the car. Price and interest rate matter most. Never negotiate a payment amount.
agreed. Decide how long you want it and realistically how many miles you will do in it and take it from there. There is room to negotiate on MSRP *and* rate pretty much everything else is less so.
Money factor was .00085
Discount was 10% from sticker
This was 2014 boxster s. Haggling might have resulted in deeper discount.
Another trick is getting you to put money down and magically payments get lower.
All that you are doing there is prepaying.
Technically you could do a one pay and your monthly payments would be Zero.
Just to clarify, if you did a pre-paid lease it would remove interest and lower the lease cost
Just to clarify, if you did a pre-paid lease it would remove interest and lower the lease cost
Only partly true. You also must pay interest on the residual amount, which you are "borrowing" until you turn the car in.
To me, the biggest disadvantages to anything pre-paid is that you lose the advantage of leasing (low payments and low down payment, typically) plus most leases have gap protection. If you prepay, you've covered the gap.
Don't get a lease with too many miles either. Aim to get the minimum number of miles you can, so you expect to return the car just slightly over. You are basically prepaying the miles and they are very expensive, so you don't want to get too many. Also the penalty for going over ($0.30) is pretty cheap. The difference in money factor between 7,500 miles per year and 10,000 is 1% of MSRP - this can be $1,300 for example. For a 2 year lease, if you ended up driving 10',000 miles a year anyway (5,000 miles over you lease), the penalty would be $1,500. Which is only $200 more than prepaying for miles. If you sell the car, write it off, buy it or often trade it in, the mileage is unimportant, so they win again if you prepaid for lots.
I bet there are many leases out there for 12 or 15,000 a year where people only end up driving a few thousand miles at most....
7,500 or even 5,000 miles a year can sound crazy low, but be realistic about how much you will drive this car vs other cars.
Using the payment estimator on Porsche NA's site on a 48 month lease for a C4S, adding 2000 miles a year (from 10K to 12K) only adds $20 a month. This equates to a $0.12 per mile. This is cheaper than paying for going over at $0.30 per mile.
The confusing part for me is the comparison between financing and leasing. With no down payment or trade-in, 48 financing payments will have cost you $44K more than 48 lease payments, but you end up with a 4 year-old 911 to your name. Wouldn't that same car be worth more than $44K, 4 years from now?
This is a generalization, but I would never do a lease for more than 36 months and even that is stretching it. The sweet spot to me would be 24 months if the rates were okay. I think the figures quoted above show that Porsche doesn't really want you do to a 48 month lease...I agree that example appears to work in their favor, I would think the car would be worth $10K or more than that at least after 4 years.
This is a generalization, but I would never do a lease for more than 36 months and even that is stretching it. The sweet spot to me would be 24 months if the rates were okay. I think the figures quoted above show that Porsche doesn't really want you do to a 48 month lease...I agree that example appears to work in their favor, I would think the car would be worth $10K or more than that at least after 4 years.
Why do you say the sweet spot is 24 months (compared to say 36)?
Why do you say the sweet spot is 24 months (compared to say 36)?
Churn. If there is a decent rate for 24 months, and you're a chronic car flipper, getting a brand new car every two years just seems right. Guess it depends on your expectations.
I'm not generally a leaser, but I had one that really worked out well. It was a 2006 Audi A3 sportwagon that I used mostly for commuting and bike hauling. It was a 36 month lease with really good terms, and a 15K per year allowance. I always had another vehicle during that time so when I turned it in, it had 43K miles on it, and the only out of pocket expense for me was one set of tires during my term.
If I knew I wanted a new car often, I would go the 24 month route, and for the limited amount of use most of the cars on this forum seem to get, that sounds like a perfect timeframe.
Just to clarify, if you did a pre-paid lease it would remove interest and lower the lease cost
Actually not even partially true. There are two ways dealers calculate leases. The first allows the lessee to pre pay part or all of the depreciation and pay interest on the remaining balance and residual. The second allows the lessee to prepay the payments which include ALL of the finance charges that would have accrued over the life of the lease. Unfortunately Porsche uses the latter method.
09-22-2014, 06:47 PM
lease negotiation help
