Quote:
Originally Posted by bimmer456
You can negotiate the terms such as monthly payment and purchase/residual payoff price just like with a purchase.
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Residual value in a lease typically can not be negotiated. But your monthly payment is essentially a function of the difference between cap cost and residual value (plus interest/taxes/fees). So rather than wasting your efforts on trying to negotiate residual value, a better strategy would be to negotiate the discount off MSRP.
In lease terms for the lessee, 10% off MSRP is the equivalent of a 10% increase in residual value. The difference is you're more likely to get 10% off MSRP than you are to get a 10% bump on residual value.
Variables which impact the monthly payment in a lease are:
MSRP Can not be negotiated
Dealer discount off MSRP Can be negotiated
Incentives Can not be negotiated
Residual Value Typically can not be negotiated
Money Factor Unless dealer is inflating MF, can not be negotiated beyond buy rate
Government Fees Can not be negotiated
Dealer Fees Certain erroneous fees can be negotiated (i.e. inflated doc fees)
Lease Term Can be adjusted
Annual Mileage Can be adjusted
DAS (Due at signing) Can be adjusted/negotiated (i.e. downpayments, security deposits etc)
Sales Tax Can not be negotiated
To truly understand if you're getting a good deal on a lease, you need to properly understand how each of these factors play a role in the overall calculation.