 TITLE: How to Negotiate a Car Lease CONTENT: Know What You Can and Can't Negotiate\n-------------------------------------\nShopping around at different dealerships and comparing prices can help you save money before you even begin the negotiation process. Look for lease specials on your favorite models, and don't be afraid to drive to an out-of-the-way dealership to get a better deal. You can quickly search online or call the dealership directly to learn more about any special offers they have available.\nOnce you've found a deal on a vehicle that works for you as a starting point, it's time to call or sit down with a sales associate and negotiate. Before you dive in, keep in mind that not all terms of lease agreements are negotiable.\nYou might have luck negotiating the following items:\n*   **Gross capitalized cost**: Research to see what others in your area are paying for leases on comparable vehicles. The dealer will try to get you to focus on the monthly payment and offer you an extended lease term to make sure it fits your budget. Don't fall for this—negotiating a lower capitalized cost can also give you a more affordable monthly payment, without extending your lease obligation.\n*   **Mileage allowance**: Make sure your lease's annual mileage allowance suits your driving needs. If you don't drive a lot, a lower mileage allowance can reduce your monthly payment. But if you're on the road a lot, your mileage allowance might be impossible to adhere to and cost you when you return the lease. Paying more for a higher allowance can help you avoid extra fees and save you in the long run. You might be able to talk your way into a higher allowance without any extra fees, but don't count on it.\n*   **Buyout price**: Let the sales associate know if you plan to buy the vehicle at the end of the lease, and they may be willing to reduce the buyout price. Potentially, you can negotiate it down to an amount lower than the anticipated market value of the car at the end of the term.\n*   **Money factor or interest rate**: Your creditworthiness plays a factor in this cost, and higher credit scores can help bring it down. Some dealerships offer rock-bottom rates to those with excellent credit.\n*   **Trade-in value**: If you're trading in your car, make sure it's in great condition for the appraisal and ask for a higher value than what they initially offer. The more you're able to get for your trade-in, the less has to come out of your pocket.\n*   **Disposition fee**: The dealership may be willing to waive this fee if you buy the vehicle. It's also possible to avoid the disposition fee if you agree to lease another vehicle once your lease term is up.\nHowever, the dealer probably won't budge on these costs:\n*   **Residual value**: This number is usually set in stone since it's determined by industry data. Plus, since most lease deals include a purchase option, the dealer stands to lose money if this number comes down and you choose to buy the car.\n*   **Acquisition fee**: You probably won't have much luck negotiating an acquisition fee since it's a loan processing expense that dealerships must incur to seal the deal.\nHow Does My Credit Score Affect My Ability to Lease a Car?\n----------------------------------------------------------\nWhen you apply for a car lease, the leasing company will pull your credit report and scores to assess your creditworthiness and make a lending decision. Generally, the best interest rates go to those with excellent credit. Aim for a credit score of 700 or better before applying for a lease to get the best deal. According to Experian's State of the Automotive Finance Market report, the average credit score for new-car lessees was 729 in the second quarter of 2020.\nIf your credit score is considered fair or worse (below 670), leasing may be more expensive or not possible. You may also be limited to a smaller selection of vehicles. Purchasing a used car may be a better deal if you're in this situation. You can also find dealers who work with customers who have bad credit.\nAnother strategy to consider is taking time to improve your credit score before applying for an auto lease. Here are some tips to help you get started:\n*   Pay all your bills on time to prevent late payments, collections and charge-offs from hitting your credit report.\n*   Get current on any past-due accounts and take care of charge-offs that are already on your report.\n*   Pay down your credit card balances to improve your credit utilization ratio.\n*   Keep old credit cards open as they can lengthen your credit history and help bring down your credit utilization.\n*   Use Experian Boost™† to have utility bills, cellphone payments and other bills added to your Experian credit reports. Once they're on your report, those on-time payments can factor into your scores, potentially giving them a lift.\nTake a look at our detailed guide to learn more about what you can do to lift your credit scores.\nThe Bottom Line\n---------------\nIt's possible to get a great deal on a car lease, especially if you work hard to negotiate. Shop around for the best deal, familiarize yourself with leasing language, and know what you can and can't negotiate to save time. Most important, check out your credit score before applying to see where you stand.\nWorried that your credit score is too low to get a good deal on a lease? Get your free credit report and scores from Experian and view the factors that are affecting your score. You can also keep tabs on your score with the FICO® Score☉ tracker as you work to improve your credit health. END