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Australia Car Lease

INTRODUCTION:

Australia car lease industry has shown rapid and tremendous growth over the past decade. But finding a good deal is not everyone’s cup of tea.

You have to learn to negotiate. Yes. The traditional bargaining. Only then can you secure the most profitable deal for you.

HOW DO YOU NEGOTIATE A CAR LEASE DEAL?

Most veteran car lessees will tell you that effective communication builds a firm foundation for negotiation. Voice out your needs, your demands, and the payment you are willing to make. Only then will you be able to connect with people who can help you achieve your desired deal.

Proceed in the following order to negotiate a good deal. 

1. KNOW THE BASICS:

This part is non-negotiable for a good negotiation! Especially if this is the first time you are leasing a car. Educate yourself about the jargon of this industry. Know the basic terms and their meanings, such as:

  1. Acquisition fees
  2. Disposition fees
  3. Buyout price/ Payoff price
  4. Money Factor
  5. Annual Percentage Rate (APR)
  6. Residual Value
  7. Manufacturer’s Suggested Retail Price (MSRP)

2. DO YOUR RESEARCH:

You must update yourself about the car lease industry rates. Search for different offers on different websites. Get car lease quotes from different dealers in Australia.

3. NEGOTIATE:

Once you find a deal that offers you maximum benefits in all aspects, DO NOT SETTLE! Yes, you read that right. This is where your negotiation starts.

Get the best deal among many. And then, start bargaining on the negotiable terms.

WHAT FEES ARE NEGOTIABLE WHEN LEASING A CAR?

A) Drive-off fees (or, down payment)
B) MSRP
C) Money Factor
D) Administrative costs charged when returning the car
E) Termination fee
F) Security deposit
G) Any additional upfront charge

WHAT FEES ARE NON-NEGOTIABLE WHEN LEASING A CAR?

A) Acquisition fees
B) Disposition fees
C) Invoice price of the car

WHICH FACTORS WILL DETERMINE YOUR MONTHLY LEASE PAYMENTS?

Negotiate a deal to ensure that your monthly instalment value is not too high.

Here are the factors that will determine your monthly lease payments:

1. MONEY FACTOR:

This is the interest you pay on the car lease. It determines the Annual Percentage Rate. Simply multiply the money factor by 2400 to find out the APR.

Also known as Lease Factor, or Lease Fee, it is expressed in decimal.

An APR between 3% and 5% is ideal for a car lease in Australia.

2. RESIDUAL VALUE OF THE CAR:

The residual value is the price of the car at the end of the lease term. It indicates the depreciation cost of the car.

The residual value of a car is inversely proportional to its depreciation cost. Thus, the lower the depreciation, the higher the residual value.

Since your interest is charged on the depreciation, a car with a high residual value will secure lower interest.

3. INVOICE PRICE:

The invoice price of a car is the lowest price that you can be charged interest on. Find out the invoice price of the car you are planning to take a lease. Compare and choose the deal that adds zero to a minimum amount to the invoice price.

4. DURATION OF CAR LEASE CONTRACT:

During the term of your contract, you will have to cover service costs for your car. The service cost will be included in your monthly payment.

So, opt for car leases not extending beyond 36 months.

5. ACQUISITION FEES:

The acquisition fees are non-negotiable. But it can determine your monthly payment value.

If you are unable to pay the acquisition fees upfront, they will be covered in your monthly payment plan.

6. DOWN PAYMENT:

Traditionally, a bulky down payment reduces your monthly instalments. But you should calculate the total car lease cost.

If a high down payment does not provide you with a significant benefit in the total car lease cost, don’t go for it.

It is always safe to start a car lease with zero or a minimum down payment of 1000 dollars.

7. MILEAGE LIMIT:

It is a determining factor for your EMIs.

8. SALES TAX:

With a car lease in Australia, you pay sales tax for the car value that you use.

FAQs

Q1. Are there any other negotiable parameters in a car lease?

Ans 1. There are a few other negotiable options for a car lease in Australia.

  1. Ask the lessor about the one-payment lease option. The lessor gives you a discount if you pay the total cost of the car lease upfront. However, it is not always viable. Calculate the total cost and the discount you are offered. If it is not a huge amount of money that you are saving, don’t take the risk.
  1. Ask the lessor about the balloon payment if you want to buy the car at the end of the lease term. It should be negotiated before you sign the car lease contract. You should be able to buy the car at a cheaper cost at the end of the term.
  1. Ask the lessor about multiple security deposits. Sometimes, you can pay lower monthly instalments if you make multiple security deposits. Not every dealer will agree to it, though. And, it is risky too.
  1. Ask the lessor the amount on which he will charge interest on the lease. If a car is not doing well in the market, the dealer will provide special discounts for its lease. Your interest may even be charged upon an amount lower than the invoice price.

Q2. What is the best month to lease a new car?

Ans 2. For novated leases specifically, new models of luxury cars usually come out in the market between July to October. So, it is best to lease a car at that time. This ensures leasing the car when it has a high residual value.

Generally speaking, special discounts are offered during the last trimester of the year. It is because dealerships have to meet their sales target by the end of the year.

Q3. Should I hire a broker for a car lease in Australia?

Ans 3. If you are leasing a car for the first time, it is highly recommended to hire a finance broker.

Q4. Are car lease brokers worth it?

Ans 4. Hiring a car lease broker means, you get the maximum value for your car lease deal. How?

It is their profession. Hence, they always stay updated about the latest rates in the market. They are aware of the discounts and incentives that are doing the rounds. They have a widespread connection.

Car lease brokers work on commission. So, they will make sure that you get a car lease at the best price. They can negotiate way better on car lease deals. The result? You get a much better deal than you could find on your own. A much better deal than you ever expected!

At Finance Brokers NSW, get knowledge and advice from experts in car lease.

We have been serving in the finance industry for more than three decades now. Our team consists of exceptionally experienced individuals who are dedicated to helping you gain maximum benefit from a deal. We look for long-term financial solutions. We do the hard work for you so that, your long-term goals can be fulfilled.