I'm looking for some suggestions on tips and tricks I might want to consider when negotiating a lease on a new car.
So, I'm planning on leasing a new car shortly. I've done the pros/cons analysis, and a lease is the better choice at this point in time. I know exactly what I'm looking for: a 2017 VW Passat R-Line, in white, with no added options, on a 36 month, 10k miles per year lease (I've been tracking the miles we drive on our current car for the last two years and we pretty consistently run about 8,000 to 8,500 miles per year).
I've also done my research on the basics of the leasing system: the "magic" numbers - money factor and residual value, and how the components of the monthly price are determined, and I've found a decent source for the current values that VW is using (RV pctg of 52% for a 36/10, a money factor of 0.00015, and lease cash of $1,750).
I've also done a little deeper digging and have a basic understanding of how the ratio between the "invoice" price the manufacturer issues to the dealer and the actual cash-out-of-pocket the dealer pays, including such esoterica as manufacturer assistance on floor plan financing (the manufacturer kicks in money for a few months to cover the dealer's financing costs on its inventory) and stepped volume sales bonuses (manufacturers will pay dealers a bonus for selling more than a given number of cars, and the amount of the per-car bonus steps up as the total volume sold increases). I've also found materials from a gent who has, from what I've read on a variety of other sources, spent years and years obsessively analyzing the leasing process. In particular, his data shows that the difference between the MSRP and the invoice price of the car has narrowed over the years, in part because various types of "assistance" and charges the manufacturer offers to the dealer are run through the invoice, so that the invoice no longer really represents the dealer's net/net cash cost for the vehicle.
I also have a better idea of what goes into the various mysterious "fees" dealers typically lard into the bottom line - usually slipped in there as extras after the price has been negotiated - and the extent to which they can, and cannot, be negotiated; for example, the destination fee, which is the fee the manufacturer charges the dealer for delivering the car, and the lease acquisition fee, which is the fee the lease financing company charges for it costs underwriting the lease, generally cannot be negotiated. Based on basic research, I believe the delivery charge is likely to be about $820 and the acquisition fee about $625.
But other fees, like the dealer prep fee, can be negotiated; in the case of the dealer prep fee, it's better avoided altogether by telling the dealer you don't want any prep done other than having the plastic coverings removed from the body and the interior - from what I've read, do not ever let the dealer prep the car beyond that because they will inevitably end up running it through their dirty, grotty old car wash, which will start scratching up the near-perfect finish on the car.
The current MSRP as listed on the websites for the various LI dealers is $25,195 ($25,570 in one case). Based on that, and on everything else, I've settled on a target price of $22,000, net of the $1,750 lease cash. I'm thinking that I start a little lower than that, perhaps with a net/net target of $21,000, but have a maximum price of no more than a few hundred over $22,000 (I've run scenarios up to $22,500 that should still be affordable). My approach is to start low, so I have a few hundred, up to a thousand, that I can "give" back to the dealer, but I plan to stay firm with my target. I also plan to insist on negotiating all of the components that go into the bottom line price, but not to negotiate based on a set bottom line price. I also want to see the detail on everything that will go into the contract I will ultimately sign before I sign it, including a reasonable estimate of the sales tax (NY charges sales tax on the full lease amount up front). I know what my max. monthly payment amount is, but I am not going to negotiate to the payment, either.
Finally, I am planning on trying a reverse of the old dealer negotiating "trick" of keeping you waiting, cooling your heels, while the salesperson chitchats with the sales manager. If we hit my max target price and they still won't agree, then I will simply walk away - politely, without rancor, or nastiness - but instead of actually physically walking out the door and driving away immediately, I am going to ask if they mind if I sit around for a while and wait for my wife and daughter to come pick me up. I'll just say that they had some errands to run and are running late. Then I'll pull out my phone, or my tablet, and happily work or play games, or perhaps bring my sketch book and do some sketching for some furniture pieces I'm thinking of building.
It may not do any good, but the idea is to give them the opportunity to take second shot at me after I've already shown my willingness to walk away from a deal that wasn't to my liking. My reasoning being that the "walk away" is part of the negotiating dance, but if I literally walk away it's not very likely that they're going to come running after me once I'm off the lot and driving away (they might, but out of sight is usually out of mind). But if I "walk" but am still physically present - and just sitting there enjoying myself and not overly worried that I didn't get the car I came to look at - then there is a slightly better chance that they might have a second go at me, particularly if a new salesperson comes around and tries. If several salespeople have gone to the sales manager with the same person and the same offer, there is, IMHO, a somewhat better chance that s/he will finally agree to my terms to get the sale.
In other words, the idea is to turn the tables a bit by making the long wait in the dealer's showroom a matter of fun on my part rather than a matter of boredom and tension on my part. Instead, I want to shift a little bit of tension onto the dealer by having a potential sale just sitting there, ready to close if they just agree to my terms. A bird in the hand is worth two in the bush, after all, and as long as I'm sitting in the dealership, I am a potential bird in the hand and not just a bird in the bush.
All that being said, any other suggestions would be welcomed. I don't like high-pressure tactics - either used on me, or by me, but I'm open to any other ideas.
