Preparing to Lease a Car Before Going to the Dealership

Before you step foot inside the dealership, there are several very important things you should take into consideration and understand. In this article, I will list and explain several important points you should seriously consider before you even step foot inside the car dealership. Read them carefully.

1. How is your credit score? Your credit score can literally make or break the deal. You can negotiate the best deal, you can have a great income to prove you can afford the payments, but if your credit score is not the part, you have no deal. Here are some credit score tips and strategies you should incorporate before you visit the dealership.

Do NOT make any major credit card purchases a few months prior to leasing your car. Before leasing my Accord a few months ago, I had about a $2,500 balance on my credit card which I planned to pay off and knew that I should pay off before leasing my new car. I ended up paying off the balance about a week before I leased my new car. But guess what? When the car dealership ran my credit to determine my credit score, this $2,500 balance still showed up on my credit report! Obviously, this big balance was bringing down my credit score. But the point is, it takes about 2 months for the credit bureaus to update your credit report to reflect new changes. For this reason, you should try to avoid big purchases or more importantly pay them off a couple months before you plan on leasing a new car. 

Do NOT slip up on any credit card payments, mortgage payments etc. a few months before leasing a car. A few months before leasing a car, you need to make your credit as perfect as possible. You should NOT miss any credit card payments or incur any late charges. It seems like common sense. Not only will your credit score plummet, but a notation will also be made on your credit report. So make extra sure that you do not miss payments or default on any payments a few months before you lease a car.

You will not qualify for the best deal unless your credit score is 720 or higher. In other articles on this website, I will explain specific strategies you can take advantage of in order to get     the lowest monthly lease payment. However, these strategies are worthless if your credit score is not good enough. The best deals go to tier 1 customers (720+ credit scores).

You will not qualify for a lease with “baby” credit. You have baby credit if you have credit cards with very low limits and no variety in the types of credit you have. Let me give you an example. If you have 3 credit cards, with a total limit of $8,000, it will be somewhat difficult for you to get qualified to lease a car. The dealership wants to see that you have a total credit limit that exceeds the value of the vehicle you are leasing.

You will need a co-signer if your credit score isn’t high enough and if you have “baby” credit. The co-signer is basically another person whose name also appears on the lease deal and is equally liable if car payments are not made. He/she should have better credit and a longer credit history in order to assume most of the risk involved for having the finance company lease you the vehicle since your credit isn’t good enough. Generally, he has to be a blood relative in order to act as your co-signer. What’s great about co-signing is that both of you equally build credit even though only one of you (presumably) makes the payments. But again, both of you are legally responsible for making sure that payments are made every month.

Run your credit ONCE and ONLY ONCE at the dealership that gives you the best deal. Do not let every damn dealership run your credit. Not only will this negatively effect your credit score, it is also absolutely unnecessary. The only time you should actually have the dealership run your credit is when it is absolutely necessary. When is it absolutely necessary? When the dealership has offered you a final deal that you believe is a good deal and you are ready to sign the papers. If you don’t think it’s a good deal, keep negotiating. If the dealer asks about your credit, tell him to assume you have tier 1 credit (or that your cosigner has tier 1 credit). That is all you have to say if he asks something like “Well…how’s your credit?”

2. You should know how to calculate a lease payment from start to finish. Don’t worry, this will be explained in detail in the next article and only requires basic addition, subtraction, division, and multiplication. But for now, just know that the lease payment just has 3 parts:

1. The Depreciation Fee
2. The Finance Fee
3. Sales Tax

I will explain how to calculate these fees individually. Add these three fees together to get your final monthly lease payment.

I will show you exactly how to calculate the entire lease payment in the upcoming articles. At the dealership, you should always be prepared to calculate the lease payment by hand whenever you are offered a deal by the manager. This is for verification purposes to make sure the dealership doesn’t screw you over. Also, because they will all be sitting there watching you as you calculate the lease payment by hand, they will be quite impressed and will realize that you are not dumb enough to fall for their crappy deals or other bullshit. By the way, most of the salesman, including the managers, do not even know how to calculate the lease payment by hand. Obviously, the computer automatically calculates the payments. However, you can try to make them feel insecure by asking them to calculate the payment by hand in order to verify the accuracy of the computer’s calculation.

3. Put yourself in the right mindset before going to the dealership. This is arguably the most important tip. There is a certain attitude or way of thinking and a specific way of carrying yourself that establishes the right atmosphere so that things can flow smoothly once you’re at the car dealership. Here are the take home tips for establishing the right level of thinking.

Remember that the only reason you are going to a dealership is to lease a car and to get the best deal possible. Okay, so you may be thinking that this sounds like common sense, but let me tell you something. If you’re conscious about it, the salesman will put a great deal of effort into trying to relate to you in some fashion, or trying to come across as someone who is friendly and not much different than you. Basically, the salesman will try to understand who you are, and try to relate to how you portray yourself and other important aspects of your life. For instance, if you tell him you have a son who is in medical school, he may add that his son just graduated from medical school. It’s a psychological thing — we like the people who most resemble us. 

Remember to try to avoid talking about things that are not important. Any salesman or manager who works at a dealership understands that most customers like you and me believe that dealerships are out there to screw them over. As I explained in the last sub-tip, salesman are wonderful talkers and will try to talk to you in a very calm and friendly fashion. They could talk about things like your family or what you do for a living. Their goal is to make you put your guard down so that your interaction with them is comfortable, natural, and trusting. It is at this point that they will be able to get you to sign the papers. Your goal should be to never put your guard down and never ever get too emotionally absorbed in a conversation with a salesman. He is not your friend and never ever feel like he is your friend. This way, you’ll always have your guard up.

Remember to always be ready to WALK OUT of the dealership if you don‘t get what you want. You are the customer. You decide whether you want the car or not. If you don’t think you were given the best deal and if things just don’t seem right to you, WALK OUT. Never feel pressured to lease a car. Even if you were at the dealership playing cat and mouse with the salesman for 4 hours, you are not obligated to buy a damn thing. That’s why their business cards generally say “Sales and Leasing Consultant.” A consultant is someone who gives you expert or professional advice. Take the advice and move on.

Remember to make sure you have a neutral attitude toward the car you‘re interested in leasing. Seriously, don’t start smiling and jumping up and down when you get inside the car for a test drive. The point is to express as little emotion as possible. The focus of your communication with the salesman should be on the actual deal. That is, your main concern should be how much you’ll end up putting down and how much you’ll end up paying every month for the car. You can learn about all the “cool” features of the car on the internet before visiting the dealership.

Remember that a deal is never a good deal until you have visited as many dealerships as possible – you can almost always go to another dealership to get a better deal. Here, I’m really referring to my leasing strategy that I have utilized several times. Basically, once the dealer has given you a certain deal, you ask him for a print out of the deal, and then take that print out to another dealership in order to help you get a better deal. The important point here is that you should not sign a deal – even if it seems like a great deal – if you have not been to other dealerships that sell the same car.