What am I doing wrong?

I currently drive a 2014 Mazda6 but I just started working in a busy, crowded downtown area and want to get into something smaller with better gas mileage. So far, I’ve looked at an Impreza, Mazda3, Civic and Lancer. I want something that will still be fun to drive, preferably a higher trim level with some packages, but still an MSRP around $27-28k. So far the best deal I’ve gotten was $349/mo for a 39mo 15k a year lease, which, after reading a lot on here, seems incredibly high. I even told a Honda dealer I’d sign immediately if we could get a Civic under $300 a month and he just shot me down hard.

I’m in Charlotte, NC and need 15k a year. I’d love to get a 2 year lease, but 3 seems to be a lot more standard. I’m definitely open to suggestions. Help?

Hello mikemil50, I recommend selecting a couple of cars and building them as you’d want them on their respective websites. Then, find out their MF and residual, and use a lease calculator(like the one offered here on leasehackr) to find out your monthly lease payment at MSRP. Afterwards, go to sites like Edmunds and/or TrueCar to find out the discounts off MSRP offered on average. Use this cost on your calculator to see if the final monthly payment is agreeable to you or not. Play with this until you find a price you’re happy with. Finally, shop dealers in your area(or further) to see which will grant you that deal. It sounds like a bit of work, but it’ll be worth the peace of mind.

My experience has been the same as mikemil50. I have gone to a few dealers in my area and they are either completely inflexible, stating things like: “Our lease is for 39 months at $249/month.”, or they use all kinds of sneaky sales tactics (higher authority, good cop/bad cop, etc.) to confuse the issue.

The best offer I’ve gotten was on a 2016 Chevy Cruze LT. They quoted me a net selling price of $20,298 at $129/month, with $2K down (NOT a security deposit), for 48 months! Thanks to Leasehackr, I know this isn’t a good deal. (The initial offer was even worse: $249/month for 39 months). This was after literally hours of negotiation and parrying all kinds of sales tactics. BTW, anyone not familiar with common sales techniques should refer to:

http://changingminds.org/disciplines/sales/closing/closing_techniques.htm

This sleazy dealership used most of these tactics in their relentless attempt to close the deal. They used the “Puppy Dog” close on me, and I took the bait, seeing it for what it was. The really despicable thing was that while I had the car for the overnight period, I found a hang tag showing the car was on clearance for $18,500. Having been quoted the $20,298, this really angered me. This is truly caveat emptor.

It seems to me that creative leases aren’t embraced by dealers. Is it a hassle for them? Is it unprofitable? Is it too much work? Do they dread dealing with informed consumers? They seem to want to steer you down a path that is disadvantageous to the consumer, and by default, advantageous to them.

I’m interested to know the negotiation tactics people are using to successfully get the leases as described here on leasehackr. Michael et al, if you’re reading this, I may just take you up on your negotiation service. What does that cost, BTW?

I have some ideas on this. I am no expert but here’s what I think about the questions you’ve asked.

Businesses with flexible pricing models (think car dealers, airlines, hotels, etc) all have a single goal. That goal is to sell their product for the highest price that they can. Car purchasing is one of the few places in our lives where we have to negotiate individually for the price we want. And so instead of simply having a set of fare rules like an airline to qualify for the best fare (like staying over a saturday night) car salespeople size you up to try and figure what they can get out of you. That’s their job. I believe with car dealers (as I have read elsewhere) that your best chance at getting a good deal is to shop with the internet department or fleet manager. Apparently they have a different compensation structure that allows them to sell for less. In some cases their job is specifically to bring in incremental sales, deals that would never come walking through the door.

When I first contact a sales manager, or internet manager I do so by phone. I introduce myself (first and last name) tell them exactly what I want and am unfailingly polite and clear. If they are resistant to pricing over the phone i remind them that I am calling from out of town so its the only way. And as you will see below, I don’t call them until I already know what price I am willing to pay. So I ease their mind a little by saying that if we can agree on a price that I am done shopping, I’ll come get the car. I am not just wasting their time to get a price so I can go elsewhere and shop it again. Once you understand lease calculations you will know to steer the internet sales manager away from talking about lease payments. In fact, don’t even mention you’re leasing. Just talk about the sale price of the car. IF they ask you whether you will lease, you can say yes (no need to lie) but that you want to focus on the price of the car since you already know what term you want, the residual and the money factor as well as the promotions.

The second thing to know about car dealers is that you’re almost never going to get offered a rock bottom “leasehackr” deal. It just is not going to happen. You will have to work for it. First thing you must do is understand exactly how a lease works. There are plenty of articles on this and I can link you to what I’ve written on this site if you want it. A lease can be calculated with pen and paper in two minutes. And you should do that at least once so you really understand the mechanics of it. I can’t stress how important it is to understand a lease. I see so many comments where people ask if $XXX per month lease is a good deal for a $xx,xxx car. Without knowing all the details that go into the lease no one can really answer this question. Also by becoming intimately familiar with how a lease is calculated you will be able to keep the conversation going in the direction you need it to and you will not allow the salesperson to skip over the details you need to know.

Once you’ve done the above then you need to become an expert on the market for the car you want. First you need to know about all available promotions you might qualify for. Leasehackr is a good source for this but also check the website of the car maker. Also google is your friend and you should use it. What have others paid? For the BMW i3 I just leased I looked at True Car. It showed that for a 2015 model I could save 12% off sticker and that they have 3 dealers in my area (that will presumably offer that price). Carsdirect.com has no haggle prices for certain makes of cars. In some cases it will list a ‘target price’ and in others it will list an exact price the car can be bought for. You know that dealers are paying a referral fee to cars direct and to true car so you should be able to do better than these prices if you’re willing to work at it. Edmunds.com I have found to be reliable for determining what the invoice for the car is. Then I looked at autotrader.com and did a search for the model of vehicle that I wanted that was within 500 miles of me. I did not worry about color, trim level, or other details. I just wanted to know what the market looked like. Are there a lot of cars? Are dealers advertising discounts? What I found was that there are dealers especially in northern california that are advertising discounts of 12-15%. I read someone here on leasehackr got a 15.5% discount.

In one case I called a sales manager at east bay BMW and tried to negotiate with him. He first replied that those deals were not available in northern california and that perhaps there were better deals for me closer to my home in southern california. I replied stating that I had studied the market and found there are several dealers in northern california (Stevens Creek and Mountainview BMW) advertising big discounts and named them by name. He immediately changed his tone and offered me a car within a half percent of what I wanted to pay. At other dealers I was less successful as they claimed they just could not sell for my price (I wanted 15% off). But the good thing is that I learned that within a few minutes of speaking to them because I sounded like an expert.

The last thing to remember is you need to ask for a little bit better deal than you expect to land. Don’t go too far because you’re already bottom fishing and if you ask for something too crazy you’re the one who will sound stupid. But you have to ask for a little extra simply because no one is going to sell to you without them winning a little concession from you. The salesperson will not have done his/her job if they don’t get you to come up on your offer a little.

That’s my two cents worth. I imagine Michael will have more to say. As I said, I am not an expert but acting professional, knowing the market, knowing how the lease works and working with a sales manager will separate you from the pack straight away. And by doing so the time the dealer spends wasting your time to see if you’ll overpay will be reduced to a minimum.

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Hi CAi3Driver,

Thanks much for your detailed post. I looked up your other posts; very helpful indeed.

I note that many of the best deals are to be had in California. Seems there’s more incentives, more inventory, and more flexible dealerships. Because of these factors, there is also more competition, and thus lower prices. Given that flights are reasonable, seems like it might be worth booking a one way flight to California, and driving a vehicle home. I’m considering doing exactly this, however, I think I must also be a California RESIDENT, not just making my purchase there. Also, since I’m not a California resident, maybe I could save on the sales tax? Does anyone know if any of the above is the case?

I’m wondering about the logistics of all of this. I could set up a California LLC for a few hundred dollars, no doubt, and purchase the car in it, but my driver’s license will still be out of state. Also, how important is the maintenance package that a dealer offers? Is it generally oil changes and tire rotations only? In this scenario, I would NOT be taking the car for regular maintenance because of impracticality.

And then there’s the consideration of the annual mileage limit. I’m about 700 miles from CA, so that would be a factor in returning the car at lease end. Essentially I would drive 1400 miles (700 from the dealership when I pick it up, and 700 to return it), or about 1.5 months worth of mileage. If I had any mechanical issues, I would have to drive 1400 miles round trip to deal with them. All things considered, I’m thinking it probably wouldn’t be worth the hassle.

Perhaps a better approach would be to leverage Edmunds.com, Truecar.com, and some California dealerships and see if I can get a local dealership to match the deals. That’s what being a leasehackr is all about, right? :slightly_smiling:

you are not doing anything wrong…the dealer is out to make money. This is fundamentally why I never walk in without having the deal done. I’m trying to work the malibu deal for my mom. Take a look at the games, even though I specifically sent him all the details the first time…

Payment should be 85/mo. he says 125, lol. A hint to something amiss is the tax calc, where he is clearly charging me more than what he says he agreed to do…(always beware!)

1 LEASE # 97812 16 RES ADDS 26 DOC FEE 169.27
2 LEASE DATE 02/15/2016 17 ACQ FEE 595.00 27 DOC UPFRONT Y/N N
3 STOCK # CV16100 1 18 ACQ UPFRONT Y/N N 28 WARR PREM 0.00
4 PRICE 21284.90 19 TRADE #1 29 MAINT PREM 0.00
5 ETCH 0.00 20 PAYOFF #1 30 WARR UPFRONT Y/N N
6 TERM 24 21 CASH 787.00 31 GAP PREM 0.00
7 # ADVANCE PYMT 1 22 REBATE 5085.00 32 GAP UPFRONT Y/N N
8 RATE .0004 23 REGISTERED STATE IL 33 SEC DEPOSIT 0.00
9 DAYS 29 24 COUNTY CODE TOT INIT PMT 5872.00
10 M.S.R.P. 23390.00 25 COUNTY RATE 1.0 ADJ RESIDUAL 14501.80
11 RESIDUAL .62 GOVT FEES 221.00
12 ALLOW MI/YR 12000 TAXES 741.67 STATUS S
13 EST MI/YR 12000 RO/PO #1 INS:
14 CENTS/MILE BEGIN 0.20 RO/PO #2 MEMO#1
15 CENTS/MILE END 0.25

and my response

Also , 787 is not a cap reduction, it’s choosing not to capitalize acq fee / doc fee / plates).

my revisions…

line 3: so stock # CV16108 (1LT)
line 6: should be: cash 0
line 7: should be: 5585
Line 10: should be MSRP: 24064

Gross Cap should be 24659 (24064 msrp, 595 acq fee)
Net Cap should be 16674 (selling price of car 22,259 - 5585 from line 7)
24M/.0004MF and 14920 residual = $85.73 payment.
Tax should be 562.14@ 7% (paid up front) (Depr+Finance charge+Lease Cash rebate)

So, total upfront would be $1036= (first month payment (85.73), doc/title fees (388), sales tax (562).

I’m waiting to hear back…but will try another one soon.

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Thank you SO much for this post, this is really really helpful and helps me understand why you responded to my Jeep Compass post with the response you gave me.

I would love to ask you specifically if you know of any way I can go about finding out exactly what price I can look to get for a Jeep Compass (or a Jeep Cherokee Latitude that was posted here on Leasehackr with a really great deal) so I can go about my lease shopping exactly as you detailed it. I am good at sounding like an expert - but I have been only talking about lease prices, just like you said not to do!

Thank you again!

HI Gratuitousgratitude,

I am sure you can buy a car in California as a non resident. And I don’t think you’d pay California sales tax on it but would pay sales tax for the state/county you do register it in. Unless you’re trying to qualify for some California only incentive (like the rebate California gives for electric cars) there is no need to set up an entity here such as the LLC you mentioned.

I don’t know what part of the country you live in but there are likely a number of places you can shop. Come to California if that’s worth it but there might be someone closer. As for the lease return, I believe (please check) that most leased cars can be returned to any dealer. So you should not have to do a second road trip.

Maintenance does not have to be done at a dealer generally (BMW is an exception as maintenance is included in the price of the car. However that maintenance can be done at ANY bmw dealer, not just the one you leased from.) . However any warranty work would have to be at a dealer. Of course you should not be leasing a car that does not generally have a dealer in your area as there will likely be something that needs to be done under warranty.

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Well, I posted on your other thread that it seems the CarsDirect site lists a bunch of incentives that maybe you could qualify for? It’s not clear whether they can combined. You could call CarsDirect and ask them to find out for you (costs nothing to do). If you google you might find the full terms/conditions of each of the incentives. Otherwise you have to shop online as I had described to see what kind of deals are advertised. If you know you want the leasehackr deal you can call and make offers a little lower than that and see if you can get someone to bite.

By the way I’ve looked up all of those incentives and started getting pricing according to how you suggested, and I’ve started doing everything the way you suggested. Once I’m for sure about realistic numbers and understand a little better I will repost on my topic. I do think I finally understand the math though - but these guys talk so freaking fast and dodge all of my questions. You are right about saying you are calling from out of town - I called a dealership in Texas and straight away told them I couldn’t get a car from them, but that I figured they would be honest with me and both guys I talked to there were just super honest and informative and relaxed because they knew I couldn’t buy anything from them. :slight_smile: (I’m in Los Angeles)

CAi3Driver,

Thanks for the reply. I’ll keep all of this in mind. I called a dealership in CA and the internet sales manager said he’d have to check on the logistics of out-of-state sales, which is what prompted my prior post.

Thanks!