How A Professional Negotiates A Lease
HOW I NEGOTIATE A NEW CAR LEASE
I am a Professional Automobile Sales Manager who is now Retired.
The components of how to negotiate a New Car Lease are as follows:
- You must know everything the “Desk Manager“ knows. He works all of the ongoing negotiations between the salespeople and customers. He is the person to whom the salesperson go to receive PRICES & MONTHLY PAYMENTS. The “Desk Manager” is the Manager who is in control of all PROFIT MARGINS being negotiated on the showroom floor.
- The LEASE PROGRAMS are subject to change on a DAILY BASIS! If you visit a dealership and are quoted a lease payment, the desk manager must LOGIN to the Manufacturers website, input the 17 Digit VIN# you are interested in Leasing or Buying to obtain THAT DAYS CURRENT PROGRAM.
- If you come back to lease the vehicle 3 days later and the program actually changed for the BETTER, you will never know it, and the dealership will keep the additional profit to themselves.
- If the program actually changed for the WORSE then the dealership will BACK DATE the Lease Contract to the day you visited the dealership when the program was better to get you the same deal they quoted you that day.
The Desk Manager must know exactly what the current lease programs are INCLUDING:
- “BUY RATE“ this means what the dealership pays to “BUY” the money from the BANK or LEASING COMPANY and then the dealership turns around and “SELLS” the money to you at a PROFIT of up to 300 Basis Points OR a Full 3% A.P.R. OR anywhere in-between.
- “RESIDUAL VALUE” this means the value of the vehicle is at the end of the lease or what is “leftover” the “residual”
- “CONSUMER REBATES“ this means the rebates offered to the Consumer by the vehicle Manufacturer which are subject to change on a DAILY BASIS. Consumer Rebates are taxable and as such MUST BE DISCLOSED to the Consumer.
- “DEALER CASH” this means Rebates directly to the dealership from the Vehicle Manufacturer OR Better Known as DEALER CASH. Dealer Cash is NOT Taxable and as such DOES NOT HAVE TO BE DISCLOSED TO THE CONSUMER.
- “STAIR-STEP DEALER CASH“ this means that the dealership must achieve their SALES OBJECTIVE assigned to them by the vehicle manufacturer in order to qualify to receive TOP-LEVEL-PAYOUTS. This is an incremental payment directly to the dealership from the Manufacturer. Example: Sales Objective of 100 units. Payout Levels are 1-25 $250 each non-retroactive, 26-50 $500 each non-retroactive, 51-75 $750 each non-retroactive, 75-119 $1,000 each non-retroactive, ATTAINING 120% + of OBJECTIVE = 120 Units = $1,500 RETRO-ACTIVE TO CAR NUMBER ONE…
- “HOW MUCH STAIR-STEP MONEY ARE WE TALKING ABOUT“ (Units 1-25 @ $250 = $6,250)+(Units 26-50 @ $500 = $12,500)+(Units 51-75 @ $750 = $18,750)+(Units 76-119 @ $1,000 = $44,000) Selling 119 Units pays at total of $81,500 Total….. Selling 120 Units ONLY ONE MORE UNIT Pays $180,000 that is almost an extra $100,000 for only selling one more unit!
- “GAP INSURANCE” What is it? Do you need it on a Lease? How much does it cost? Is it included in the lease?
- “GAP WRAP INSURANCE“ What is it? Is it worth buying? DO YOU UNDERSTAND THE DIFFERENCE from GAP INSURANCE? If NOT, it is costing you money…
- “EXTENDED WARRANTY” When your lease term is longer than your Factory Warranty, do you buy an extended warranty? Go with a shorter lease term within the MILEAGE of the Factory Warranty? Should you even be Leasing?
- “HARD ADDS“ This means Optional Equipment that can be added to the vehicle that is not already on the window sticker. Do you understand how this equipment is calculated into your lease payment? Do you really understand the calculations?
- “SOFT ADDS” This means Optional Equipment that can be added to the vehicle that is not already on the window sticker. Do you understand how this equipment is calculated into your lease payment? Do you really understand the calculations? DO YOU UNDERSTAND THE DIFFERENCE BETWEEN HARD ADDS & SOFT ADDS? If NOT it is costing you money…
- “MILEAGE per Year“ This means how many miles you are allowed to drive during the term of your lease. Most salespeople ONLY negotiate the lowest mileage to keep the monthly payment lower and make it easier for them to sell you on the monthly payment. DO YOU UNDERSTAND THE DIFFERENCE IN MONTHLY PAYMENTS BETWEEN 10,000 Miles – 12,000 Miles – 15,000 Miles EVEN 20,000 Miles per Year? NEVER TRUST the salespeople to tell you the truth about your monthly payment when adjusting mileage BECAUSE this is an area where the salespeople lie to you and increase the profit of the sale by over $1,000… WHAT YOU DO NOT KNOW COSTS YOU MONEY!
- “FINANCE / LEASE MANAGER” The Most Dangerous person in the dealership is the F&I Manager (Finance & Insurance / Lease Manager). He has the ability to manipulate the interest rate he charges you. Let us say you are leasing a $30,000 vehicle and your lease is marked up 3%, do you know how much extra interest we are talking about? Financing $30,000 for 36 months with a Full 3% Mark-Up is equal to approximately $2000 additional interest charged to you that is paid directly to the dealership from the Bank or Leasing Company. This is known as a Finance or Lease Reserve Profit 100% is paid to the dealership because YOU DO NOT UNDERSTAND THE NUMBERS ON THE LEASE CONTRACT.. The dealership only wants to talk about “How much out-of-pocket” and “Your Monthly Payment”.