Is it possible to negotiate on a vehicle purchase?

[sethmachine]

I'm approaching the end of my lease in a few months. It was my very first vehicle and I decided to lease because I wasn't 100% sure of my job security, so that if things fell through I wouldn't have been responsible for paying off a car loan that I could no longer afford. I also don't know anything about vehicles/cars, so I wanted a new vehicle to avoid all those hassles (family has gone through plenty of used cars and so have friends, so I'm familiar with all the overhead).

For me, there is a significant overhead in time to having to go to mechanics / shops or learning more about car repair, which translates to real money.

I am interested in purchasing the vehicle I leased since it does what I need it to do and will require limited maintenance over the next few years.

I'm told my payoff amount would be around $15,000.

I was thinking of offering $10,000 straight up in cash--no financing, etc. to the dealer in order to purchase the vehicle outright. From my discussions they seem to expect that everyone will finance the vehicle.

Now I don't know if there's any difference to the dealer if I finance it or I pay out of pocket--do they get the money faster? But I imagine there's very little over head for an immediate purchase, and the money goes straight to them.

I'm completely ignorant of how car / lease sales work. Would my thinking work with the right salesman, would I need to offer a bit higher than $10K, or would they just laugh at me?

[kork13]

Negotiable? Perhaps. Better time to have done that would have been when you first leased the car, but you should be able to do that now still. However, I doubt they would accept a $5k (30%) reduction in price. You could potentially negotiate down $1k or perhaps up to $2k, but I'd be shocked if you did better than that.

[greenskeeper]

The old lease game is they are going to try to get you to re-up the agreement on another car.

No way will they take $5k off.

If you DO HAVE $10k in cash for a vehicle, buy something used for around $5k and use the remainder to pay off debts, emergency fund, retirement, etc.

[pflyers85]

I highly doubt they would knock $5K off the price. Assuming its a low mileage lease in great condition they could turn it over to one of their used car lots and sell it for more than the $10K you are offering and to someone that will finance.

The other thing is you never want to lead a negotiation with car dealers that you intend to pay with cash. They make money on the back end with financing and if they know you are set on paying cash they are less likely to budge on price. They will budge on price if you at least say you are open to financing because they can always lower the sticker price and expect to make up the difference through the loan terms. This is where you can get them locked into a price and say on second thought I would like to pay cash.

[snafu]

Since you have a few months until the end of your lease, it would be in your interest to learn a little about cars to avoid expensive errors. You'll be buying cars repeatedly in your future and they are usually the 2nd most expensive item.

I suggest looking up evaluation details in Kelly Black/Blue Book [KBB] to ascertain the current value of the leased car [make/model/features] to have an understanding of the base line keeping in mind the dealership needs profit to remain in business. Books like Lemon Aid [Edmondston] outlines pros and cons of various vehicles and offers lists of identified weaknesses/problems to anticipate in the future. What is the likelihood your car will go 200,000 mi with little more than regular maintenance?

The costs are in the details to surprise unwary consumers so pay attention to the financing for hidden or nonsense fees. Use your phone's calculator to work out the monthly payment times the number of months to verify you are getting what you understand. 0% all too often mean financing charges have been added to overall cost.

I hope you'll try to negotiate a better deal. The worst that can happen is they'll say 'no' and you'll make another offer or ask them to lower the costs on their offer. Try to smile and make it a pleasant experience for all. Good luck

[sethmachine]

The old lease game is they are going to try to get you to re-up the agreement on another car.

Yes, that's exactly what they tried too do. They offered me a 2016 model of the same car for another 2 year lease with all the same mileage and same exact lease payment, plus paying the rest of my lease payments off.

I told them I didn't have enough information to accept that offer, so I didn't accept it.

Why is that a bad thing?

No way will they take $5k off.

If you DO HAVE $10k in cash for a vehicle, buy something used for around $5k and use the remainder to pay off debts, emergency fund, retirement, etc.

Well I've already spent $5k into my lease, so wouldn't it make sense just to purchase the thing? I'm very worried about used car maintenance.

[disneysteve]

Why is that a bad thing?

There are basically 5 ways to get a car.

1. Buy a used car that you finance.
2. Buy a used car for cash.
3. Buy a new car that you finance.
4. Buy a new car for cash.
5. Lease a car.

Of the 5, #5 is always the worst, most expensive option. "Lease" is just a fancy word for "rent". If I told you I was going out today to rent a car for the next 2 years, what would you think? But when I say I'm going to lease a car for 2 years, everybody is suddenly okay with that.

Stop leasing. Buy a car that fits your needs and your budget. And stop worrying about maintenance. My last car was purchased used and then I kept it for 14 years and over 150,000 miles. My current car was purchased in 2012 and is a 2006 model. So it is now 10 years old. I've had it for 4 and expect to have it for 5-6 more years.

Do used cars need maintenance? Of course they do. But so what. The tens of thousands of dollars you will save over your lifetime by driving paid off cars more than makes up for the cost of the maintenance.

[Jluke]

Well I've already spent $5k into my lease, so wouldn't it make sense just to purchase the thing? I'm very worried about used car maintenance.

DisneySteve nailed it as usual.

I just wanted to point out that your vehicle is now considered a used vehicle that will require maintenance you need to pay for.

explore your options.

are you a commuter to work or a high mileage driver? I'm guessing not. A used car for 10k or less could be great for you.

[TexasHusker]

A few points:

The dealership will sell the car to you for what NADA retail says is worth, irrespective of your payoff. That could be $20,000, or it could be $10,000.

Post the specifics - make, model, miles, options and I'll let you know what a fair price would be.

As for leasing being the "worst" option, that is purely subjective, based upon what you define as best and worst. We like to trade cars every couple of years, we don't want to worry with trade ins, resale values, maintenance, and repairs. So leasing is the BEST option for us.

Granted, it is the most expensive option, but so are granite countertops and Ralph Lauren shirts. To each his own.

[disneysteve]

As for leasing being the "worst" option, that is purely subjective

Granted, it is the most expensive option

Since this is a personal finance site, I don't think my answer was subjective at all. As you agreed, leasing is the most expensive option.

Are there things that make leasing attractive to some people? Sure. But that still doesn't make leasing a wise financial decision.

[TexasHusker]

Since this is a personal finance site, I don't think my answer was subjective at all. As you agreed, leasing is the most expensive option.

Are there things that make leasing attractive to some people? Sure. But that still doesn't make leasing a wise financial decision.

even savers have their vices...

[disneysteve]

even savers have their vices...

Absolutely, but I never try to pretend that my vices are wise financial decisions.

[sethmachine]

A few points:

The dealership will sell the car to you for what NADA retail says is worth, irrespective of your payoff. That could be $20,000, or it could be $10,000.

Post the specifics - make, model, miles, options and I'll let you know what a fair price would be..

It's a 2014 Toyota Prius C, lowest tier with no custom options, i.e. the cheapest model they have. It will have about 28K miles by the end of the lease.

The payoff is about 14K.

They recently called me with a "0%" interest 36 month financing opportunity.

Can I negotiate on that to decrease the overall price if I make a large down payment (e.g. 50% or more of the payoff)?

I use the car for going to work mostly. I also live in an area where having a car is very useful.

I like this car because it's very good on mileage. I don't need a car that can race or drive through poor weather (rainstorms, blizzards, etc.).

[TexasHusker]

It's a 2014 Toyota Prius C, lowest tier with no custom options, i.e. the cheapest model they have. It will have about 28K miles by the end of the lease.

The payoff is about 14K.

They recently called me with a "0%" interest 36 month financing opportunity.

Can I negotiate on that to decrease the overall price if I make a large down payment (e.g. 50% or more of the payoff)?

I use the car for going to work mostly. I also live in an area where having a car is very useful.

I like this car because it's very good on mileage. I don't need a car that can race or drive through poor weather (rainstorms, blizzards, etc.).

Is it a Hatchback I, II, III, or IV?

If it is a I, and in Above Average Condition, it brings about $12,300 at auction. A dealer marks it up about $2500. Above Average means good glass, no stains, rips, scratches, or dings. Most cars are not Above Average.

If it's average condition, auction is $10,900, retail is $14,200.

So at $15,000, you're in the neighborhood of $1000 ABOVE RETAIL.

My offer to the dealer on the car would be $12,000. However, even though I don't normally pay retail, I would certainly consider that for a car that I know and trust. Because if you don't buy it, you're going to be searching for some other used vehicle that you DO NOT know. That is a huge deal.

Offer $12K, hold tight for a day, and if they won't budge, go $13K. Hold that for a day. Then go $14. And tell them you want the zero percent financing regardless.

[safari]

You won't be able to negotiate the purchase price of the car after the end of lease. It's set by the bank based on the residual percentage value and it's non-negotiable. The dealership doesn't own the car - if you want to buy it, the money will go straight to the bank.