​BASICS OF CAR LEASES - PART 2 - NEGOTIATING SALES PRICE

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No one willingly pays more for anything than they should. But in the world of leasing cars, that can be a hard figure to pinpoint. So what defines a good deal? There a few factors to consider.

Negotiating the Sales Price

There is a common misconception that when leasing a car, the sales price is non-negotiable. In fact, the sales price is one of the most critical pieces of the puzzle for getting a good deal on a lease! Every manufacturer has different profit margins, and those margins change over time. The MSRP is the Manufacturer’s “Suggested” Retail Price and this is what the manufacturer suggests the public will pay for their vehicle. In some instances, the dealership disagrees with the manufacturer and deems that the car will sell for more than that sticker price. However, most people wind up with some kind of discount on that number. Every car has an invoice price as well, but in the car business, the invoice has a different meaning.

Each dealer first buys its inventory from the manufacturer, and the invoice price is the amount the dealer paid for the car. What many people don’t realize however is that the manufacturer also sends its franchise dealers additional funds called holdback. Holdback is a percentage of either:

  • The full MSRP of the car sold
  • The full invoice price of the car sold
  • The “base” model MSRP, not including added equipment or packages on the vehicle
  • The “base” model invoice price, not including added equipment or packages on the vehicle

Be prepared that you will get some flak for trying to negotiate on the holdback, but be aware that it exists. Most dealers are not willing to negotiate on that number.