How to Lease a Car & Negotiate Your Car Lease Deal

You’ve weighed the pros and cons of leasing versus buying a car and concluded that leasing is definitely the best option for you—well, the right lease is the best option for you. Of course, wanting the right deal is no guarantee you can walk into a dealership and get it. But the odds of getting the right deal can be better if you plan ahead and go in prepared.

You and the dealer both want the best possible auto lease deal, but they’re likely not the same deal. The dealer knows his or her costs and what it will take for the deal to be profitable. Don’t you want to know your numbers, too? Experts suggest that you look at your overall budget to determine how much you can comfortably spend on a car.¹

The first step is to gather information, both about your situation and your options.

• Know your credit score. What kind of credit score do you need to lease a car? The average credit score for consumers starting a new auto lease in the first quarter of 2022 was 728, a slight increase from 713 for full-year 2015.² So if you have poor credit you may have a tough time getting a favorable lease.³
• Know how you use your vehicle. Do you just commute to and from work, or do you take frequent weekend excursions? You don’t want to negotiate mileage limits that are too small (or too generous—there’s no point in paying for miles you don’t drive) and find out later you misjudged.⁴
• Know the value of your trade-in. If you have a previous car (and own it), a trade-in can work for you. To use it to reduce the cost of the lease, it should be paid for (dealers may fold the unpaid portion into your lease, but then you’d be paying for two cars and driving one) and you should know what it’s worth.¹
• Know the price of the car. When you know what kind of car you want, it’s good to find out what they typically sell for. That information could be valuable when it comes time to negotiate.
• Look for deals. There may be rebates, discounts, or tax credits available that can impact the cost of leasing a vehicle.^1,5

Although there are many differences between leasing a car and buying it, negotiating the price of the car (known in leasing lingo as the capitalized cost or “cap cost”)⁶ generally is not one of them. You may wish to haggle, because the better cap cost you get the less your lease will cost.

Once you’ve worked out the purchase price, you may also be able to negotiate mileage limits and other terms of the lease.⁴ As always, shopping around can benefit your price bargaining—you’ll likely save money if dealers are competing for your business.¹

Knowing your monthly payment, or even the total cost of the lease, is not the same as knowing the total of what you’re spending. That’s because leasing is a complicated transaction with several potential additional costs.⁷

• Insurance. Because they own the car, dealers may require you to carry higher levels of insurance than you would purchase on your own. They may also require you to carry gap insurance, to cover the difference between the car’s value and what you owe if the car is stolen or totaled in a collision.⁸
• Acquisition fee. An amount charged for setting up a lease, this fee is typically $1,000 or less.^9,10
• Disposition fee. This is the lease-end equivalent of the acquisition fee. In theory, it compensates the dealer for prepping the returned car for re-sale.¹⁰
• Security deposit. Funds collected by the dealer to protect against damage or default. Dealers don’t always require security deposits. If they do, ask whether you’ll get it back if you return the car as promised.⁹

It can be a good idea to ask the dealer to disclose all fees before drawing up the contract.¹