Until the last few years, the best way to get a great car deal was … to work hard for it by haggling with stubborn dealer salespeople. With plenty of luck, careful preparation, and a heap of negotiating skill, you might get a good deal.
You would increase your chances of getting a good deal if you knew the best time of day/month/year to buy, knew dealer invoice prices and holdbacks, and had good bargaining savvy— and possessed the stamina for long stressful haggling sessions with dealer salespeople who would try every trick in the book to wear you down — not a pleasant experience for many people. Most people hate it and don’t look forward to it.
It’s not that haggling still isn’t necessary. It is in many cases. But the best car deals don’t happen that way anymore. Things have changed. The best deals are actually given to you — without haggling — by major car companies in partnership with their dealers.
Car manufacturers, in these challenging economic times, are hungry for your business and are willing to offer ready-made deals that were offered much less frequently in the past. These are deals that buyers could not possibly negotiate for themselves — because dealers are not capable of making the kind of concessions that their deep-pockets parent car companies can make. You could haggle with a car dealer all day and all night and he still wouldn’t be able to give you large price discounts, rebates, bonuses, 0% APR loans, or give you special subsidized leases, if he didn’t have help from his parent car company.
Some of the cheapest car leases we’ve seen in a while are now being offered by car manufacturers with special limited-time lease deals.
These are deals in which car companies are creating the lowest possible monthly payments by temporarily adjusting a combination of factors, such as price and finance rate, that affect payment amount. Although a low lease payment doesn’t necessarily make it a good deal, all the deals we discuss here are actually excellent deals and are well worth considering.
Nearly all cheap leases require a down payment (cap cost reduction) as well as the first month’s payment and official fees. These up-front costs, all together, are called “cash due at signing.” Most of the deals are for 24, 36, or 39 month terms and allow 1000 miles per month, average over the life of the lease.
Here are some of the cheapest car leases that are currently being offered by car companies through their authorized dealers:
There are currently a surprising number of good car lease deals for less than $200 a month being offered during September 2015 by car companies and their dealers. The good news is that the number of cheap lease deals has remained generally the same over the last few months, and promises to remain so, or become greater.
These are special limited-time lease offers with low payments of $199 or less that are based on discounted prices (lease cap cost), low finance rates (lease money factor), and high lease-end residual values. Most require a down payment, first month’s payment, and any official fees at time of lease signing.
All the leases we list below are for brand new 2014 and 2015 vehicles, although usually only for a few models and only one style of each model. The deals also are good only for a limited time. Nearly all are for 24, 36, or 39 month terms and typically allow 1000 miles per month, although a few allow less. In some cases, there are additional loyalty bonuses and/or competitive trade-in bonuses that could lower the listed monthly payment.
This month there are just a few car makes and models with special car lease deals being offered with no money down. That’s $0 due at lease signing — not even the first month’s payment. These are often called “sign and drive” leases. Honda has the most no-money-down leases right now followed by Kia, Lincoln, and Volvo. Check this page often because zero down leases come and go frequently. Most zero-down lease deals allow 12,000 miles per year with the exception of those from Volvo which allow 10,000 per year. Honda actually offers their leases both ways — with a down payment, which makes for a lower monthly payment, and without a down payment. Actually, almost any car lease can be had with or without a down payment, but you may not be able to get special promotional deals without money down unless the deal specifically makes that offer. All the promotional deals listed below do make the offer. Making no down payment doesn’t change the value of the deal. However, since you are not pre-paying some of your financed lease amount, your payments will be a bit higher. Lincoln and Volvo deals end September 30, 2015. Incentives for Honda and Kia end November 2, 2015. Here are the current (September 2015) $0 down sign-and-drive lease deals, listed in alphabetical order:
READ MORE »
Cars sales are still recovering from pre-recession levels and car makers are offering some very attractive incentives, including 0% APR no interest loans, to help get things moving again.
Some manufacturers are also offering cash-back rebates but, as you may already know, you generally must choose between the rebates and the special low-interest (or zero interest) loans. You can’t take both.
Often, rebates are a better deal, especially if you need down payment money (rebates can be used as down payment cash). However, in many cases, you don’t have a choice when only a rebate, or only a low-interest loan is being offered. See our article, 0% APR Car Deals – Good Deal or Not? for more details.
Here are some of the current car makes and models with 0% APR loan deals. Note that the 0% APR rate usually (but not always) only applies for shorter-term loans — 24, 36, or 48 month loans — and may not apply to all styles within a model line. Terms and conditions can vary by car company.
Following are some of the current 0% ARP loan deals for 2015, 2016 and a few 2014 vehicles.
There are over a hundred special lease deals for less than $300 a month offered every month from different car companies. In fact, of all promotional leases being offered by car manufacturers, the majority fall into the range of $200 – $299 a month.
These no-haggle deals are put together by combining a discounted vehicle price with a higher-than-normal lease-end residual value, and a low finance rate (money factor). The deals are usually only offered for one month, although month-to-month extensions are not uncommon.
Since customers can only negotiate price, but not residual and money factor, these deals are always better than could be independently negotiated for a normal lease.
Special lease offers from car manufacturers are genuinely excellent (often, outstanding) deals that are “subvented” (subsidized) by car companies and offered nationally through dealers for those companies. Not all of a car company’s vehicle models and styles will be offered with special leases during a given month. If a particular model or style is not included, dealers are not authorized to extend the offers to other vehicles.
If you’re looking for good new-car deals, you only need to look at the number of vehicles sitting on dealers’ lots and in manufacturers’ storage.
If it’s large number, you can expect to get good deals as the companies attempt to reduce the supply to more normal levels. The longer a dealer has a car on his lot, the more money it costs him, and the less money he makes when he sells it.
New-car inventory is measured in “days supply.” Dealers and manufacturers like to have enough supply on hand so that they don’t run out during normal sales periods, but not so much that it affects costs and possibly manufacturing schedules.
It’s a fine line that must be walked. Manufacturers try to predict how many vehicles are needed, based on dealer orders, and have that supply waiting. However, this is not a perfect world and predictions are not always accurate. This means that, often, dealers and car companies have more vehicles on hand than they can sell in a reasonable time. Generally, having more than about 90 days supply is considered excessive.
In that case, it’s time to offer customers some good deals to help sell vehicles and get inventory back on track again.
So, the key to knowing where to get the best deals depends on knowing which vehicles have more than a reasonable number of days supply., which can change from month to month but usually takes several months to change significantly, if it changes at all.
At the time of this writing, the following vehicle makes and models are in substantial over-supply situation, which means you can expect to get some good deals if any of these are the vehicle you want.
Even though the year 2105 is more than half over (as of this writing), there are new-car dealers who still have leftover 2014 vehicles, which can be had a great bargains.
Just to be clear, these are brand new cars, never been sold, and still sitting on dealers’ lots. They come with full manufacturer’s warranty and Lemon Law protection, as well as that famous new-car smell.
Since dealers need to get rid of these cars now that new 2016 models are coming out, and their lots are full of 2015 models, you can expect to get some outstanding deals on leftover 2014 models still in stock. In many cases, prices are below dealers’ invoice cost, which is made possible by generous factory-to-dealer cash that dealers then pass along to customers added to their own discounts.
In many cases, such brand new vehicles can be purchased at better prices than for similar used cars. Don’t always assume that used car prices are better.
Some of the car brands with remaining 2014 inventory are Ford, Lincoln, Chevrolet, Mercedes-Benz, Nissan, and Volkswagen. Individual dealers of other brands may also have leftover vehicles. Even of the brands mentioned above, some dealers in some parts of the country will have leftover inventory, and some will not. Of those who do, some will have several vehicles to choose from, while others might have only a couple.
Automotive customers who have poor credit are able to get car loans much easier now than in the last couple of years.
Many car companies and their associated finance companies are opening up and approving “subprime” borrowers at a pace not seen since before the recent recession.
Car buyers with credit scores below 680 are considered “subprime” and nearly always pay a higher interest rate than “prime” borrowers. However this is an improvement over the last three years when this class of borrowers were essentially shut out altogether.
Which car companies are most likely to approve customers with bad credit?
Hyundai/Kia leads the way in lending to customers with credit scores below 680. In fact, about a third of current Hyundai/Kia loans are made for such customers.
Fiat Chrysler Group (Chrysler, Dodge, Jeep, Fiat, Ram) is next. Then General Motors (Buick, Chevrolet, Cadillac, GMC) and Ford (Ford, Lincoln) follow closely behind. The conclusion to be made here is that people with less-than-perfect credit scores would have a better chance of getting approved for a loan with an American car maker than with most foreign brands. However, Toyota and Honda are showing signs of easing credit restrictions as well. (Source: Automotive News)
Most automotive consumers do at least some research before buying a new car — checking prices and incentives, looking at styles and options, comparing mileage and safety ratings, noting reliability scores and reading reviews.
But many fail to consider the cost of auto insurance as part of their buying decision when, in fact, the cost of insurance will often exceed the cost of gasoline and, in some cases actually be greater than car payments. Insurance is a major cost of car ownership, yet it’s often overlooked.
One of the major contributors to car insurance cost is the make and model of vehicle. Different vehicles have different insurance rates.
We know that more expensive vehicles have higher insurance rates simply because those vehicles cost more to replace and repair after accidents. But rates can also be high for less expensive cars — because they are wrecked more often and have higher claim incidents — or are stolen more often.
Therefore, it makes good sense to research auto insurance rates before making a new-car buying decision. A great car deal can actually be not such a great deal when insurance is considered. Insurance can easily double the monthly cost of car ownership fors some car makes and models.
So, what are the vehicles with the cheapest insurance?
Industry sources recently published results of a study of average auto insurance rates for more than 750 vehicles. Following are some of the models with the lowest rates:
Is it possible to lease a car with no down payment? $0 down?
In fact most car leases, even those advertised with a “required” down payment, are also available with $0 due at signing.
Of course, the monthly payment will be higher since you are not pre-paying some of the lease obligation.
In general, for a modestly priced vehicle, you can expect your lease payment to be higher by about $40 a month for every $1000 you don’t make as a down payment.
Although all leases are structured so that a down payment is optional, some special lease deals offered by car manufacturers in monthly promotions may require a down payment in order to get the deal. You could do the lease without a down payment but the actual deal might not be as good (see LeaseGuide.com for details about how to evaluate a lease deal).
On the other hand, some manufacturers such as Honda often offer their special promotional lease deals both ways — with a down payment and without. Even though you pay a higher monthly payment with nothing down, the deal is still a good deal. See Special Honda Leases for recent examples.
In a lease, a down payment is called capitalized cost reduction, or simply cap cost reduction.
Buying a first car can be an exciting event in one’s life. However, in the excitement of the moment, it’s too easy to make mistakes that are irreversible. So, it makes a lot of sense to be smart and do your homework first.
Some common mistakes made by people buying a first car are:
1. Buying a car that doesn’t really meet their needs — for example, buying a small sports car when a larger 4-door sedan would have been more practical
2. Buying more car than they can afford, when considering monthly payments, insurance, fuel, and maintenance
3. Buying a car that doesn’t meet expectations in terms of quality, reliability, performance, fuel efficiency, or driving comfort
4. Paying too much, when other people are paying less for the same car — and paying too much for loan or lease financing
Many of the above mistakes are made simply because buyers often make quick emotional decisions rather than thought-based, logical decisions. They don’t spend enough time considering the reality of their needs, their finances, and their expectations — and following up with sufficient and proper research to make a good decision.
So what are the steps needed to make for a successful first car purchase?
Unless you are paying hard cash for your new or used car, your auto loan financing can make the difference between a great deal and a bad deal.
An inexperienced car buyer might assume that an auto loan is nothing more than working out an affordable monthly payment amount with his dealer.
However, an affordable payment doesn’t make it a good deal. In fact, it can be a terrible deal. With more knowledge about how car loans work, the buyer can almost certainly get either a much lower payment or buy more car for the same payment.
Auto loans are based on a number of important factors, all of which affect the monthly payment amount. Let’s take a quick look at those factors now:
Loan amount – the amount you borrow, including negotiated car price, taxes, and any extras
Down payment – cash that you pay up front to reduce the amount of your loan, and reduce payment amount
Loan term – the length of your loan, in months
Interest rate – determines the amount of finance charges added to the cost of your car loan
Many people suffered credit problems during the recent recession and subsequently found it difficult, if not impossible, to get car loans and leases.
That is changing — for the better.
Financial companies that are associated with car dealers and manufacturers, such as Honda Finance, Toyota Finance, and Ford Credit, are now easing credit requirements that have been tight since 2009. They are providing loans and leases to credit-challenged people who couldn’t qualify even as recently as a year ago.
One thing that has changed, and improved, is the way in which auto finance lenders look at potential borrowers. In the past, a bad credit score was a bad credit score — and that was it.
Now, they take a closer look at why and how the customer came to have poor credit. If a customer’s credit issues were caused by a single incidence such as a foreclosure on a home caused by job loss, or unpaid hospital bills caused by an unfortunate accident., the customer has a much better chance now of being approved and getting a good interest rate.
It also helps if a customer has had previous car loans or leases and has always made payments on time with no defaults or repossessions. Car dealers and finance companies have access to special auto-specific credit scores that can take priority over other credit factors.
You know — the Nissan Leaf EV, the small and cute 100% electric car that uses no gas and produces no polluting exhaust. Owners love them and have created clubs and owners groups to share their enthusiasm.
Right now, Nissan is offering an incredible lease deal on the Nissan Leaf that is the best car lease deal we have ever seen in 25 years in the automotive industry. We plugged the deal into our Lease Deal Calculator and came up with a score of 404, the highest score we’ve seen.
Normal lease scores are typically under 100, with some special leases scoring as high as 140 (see Outstanding Infiniti Lease Deals). But this Nissan Leaf deal scores 404 !!! Wow.
Here are the details. You lease a 2015 Nissan Leaf EV for 36 months with a lease payment of $199/month and a mileage allowance of 36,000 miles, and pay $1999 down (cap cost reduction) plus your first month’s payment of $249 at the time of signing.
As part of the deal, you get a rebate credit of $7675, which is applied as additional down payment, which reduces the monthly lease payment amount. Of the $7675, Nissan is giving customers the $7500 they receive as a tax credit from the Federal government, plus $175. This tax credit is available to owners of new all-electric vehicle. When leasing, the vehicle belongs to, and is owned by, the leasing company (Nissan Motor Acceptance Corporation), who gets the $7500 credit. However, Nissan is giving the $7500 back to those who lease, as a rebate that is applied as down payment.
Lease payment seems low but is it a good deal or not?
Let’s look at an actual car lease ad
Here is an actual newspaper promotional advertisement for lease deals from the Honda web site. We’ll focus on the ad for the Accord Sedan for $199 a month, for 36 months, with $2499 due at signing.
This ad is typical of most lease ads for other vehicle makes/models.
Are the advertised lease deals actually good deals? How can you tell? What do you need to watch for in the fine print.
The car lease ads normally seen on TV, in newspapers, and on car company web sites are generally limited-time promotional deals, and are genuinely good deals.
However, it’s necessary to read the fine print in the ads to determine the conditions under which the offer is being made.
What the ad says
$199 a month, 36 months, $2499 due at signing – Monthly payments will be $199 — plus sales tax (in most states) — for 3 years. Of the $2499 due at time of lease signing, $199 is for the first month’s payment (lease payments are always at beginning of month), which leaves $2300 as down payment (cap cost reduction).
36 month closed-end lease for a Honda Accord Sedan CVT LX. This indicates this is a closed-end “walk-away” lease, which is a normal consumer lease, not a commercial or business lease. The lease expires in 36 months at which time the car must be returned, or purchased. Only this specific model vehicle is being offered in this lease. The lease can’t be extended or changed to include some other model. The ad will also specify the time period during which the special deal is being offered.
Your credit score is a numerical representation of your credit history report, which includes details of all your credit accounts and loans, and how good you’ve been about paying them. It also reports any defaults, repossessions, or bankruptcies.
Credit scores, which for most people falls between 400 (poor) and 800 (excellent), are a major factor in determining the cost of buying or leasing an automobile. It determines what interest rate you’ll pay, or even if you can get approved at all. It also determines if you will be allowed to take advantage of special new-car incentives, such as 0% APR loan and lease offers.
You have three credit reports and credit scores, one set from each of the three major credit agencies in the U.S. — Equifax, Experian, and TransUnion. When you buy a car with a loan, or lease a car, the dealer and finance company checks your credit score with one or more of the three agencies. Scores can be slightly different (sometimes, more than slightly) from each agency and you can’t control which agency a dealer or finance company uses.
As automobile consumers, we tend to focus on price or monthly payment as the most important factor of any deal. However, there are other factors that should be considered as well.
When you buy a brand new car, you always take the trip into the F&I (Finance and Insurance) manager’s office to sign your papers. But while you’re being held captive there, you’re presented with the “opportunity” to purchase a variety of expensive “add-on” products such as extended warranties, credit insurance, gap insurance, paint sealant, fabric protection, rust proofing, or security systems. These are all high-profit items for the dealer and are usually not worth the cost. If you choose to buy them, any deal you might have gotten on the price of the car is seriously eroded. A good deal can turn bad in the blink of the eye.
There are always a variety of fees when buying a car. Some are added by the dealer, others are charged by the finance company (if you need a loan or lease), and others are official fees and taxes required by the state/county/city where you live. Of course official fees are what they are — they can’t be negotiated out of a deal and don’t affect the deal, although if you negotiate a good price on your car, you pay less sales tax. And you can’t negotiate fees imposed by a bank or finance company because dealers don’t have the authority to do so.
Most advertised promotional car deals have small print that says something like, “Only applies to well qualified customers,” or “Offer only available to Tier A applicants, ” or ” Only for qualifed lessees.”
What does it mean? How does it affect your ability to get those good deals?
When auto makers put together monthly promotional incentives, such as rebates, low-interest loans, 0% APR loans, special lease deals, and factory-to-dealer cash; they put conditions on exactly who qualifies.
Although rebates and dealer cash are usually available to anyone, special finance rates and lease deals are only available to customers who have good credit. Some deals even specify just how good the credit has to be — typically a credit score of 700 or 720, or higher.
If your credit score is below the required level, you probably will not qualify. If you don’t know your score before you visit your dealer to take advantage of a special deal, you might become a little embarrassed when you discover that your score doesn’t qualify you.
It’s always good to know your credit score before you go for a car deal, even if it’s not a special promotional deal. We recommend a reputable online service that provides credit reports and credit scores. What’s your FICO score? Find out now when you check your credit report for $1 at Experian.com! Your car dealer and his finance company will use your credit score to determine the finance rate you’ll be charged for your loan or lease.
When getting a new car, is it better to buy or lease? Lease vs buy? What are the pros and cons of each?
It’s a question we hear all the time.
However, the answer is not that simple. One way is better for some people, the other way is better for others.
Both leasing and buying with a loan are forms of auto financing. Leasing is not renting, as some people mistakenly think.
With leasing you finance the entire value of the car, just like with a loan, but you only pay off the amount that the car’s value will depreciate during the lease term. All cars decrease in value over time, whether they are leased or purchased. At the end of the lease, you pay off the remaining balance by returning the car to the lease company, or by purchasing it.
An average car will depreciate in value by about 50% over a period of three years. That’s why lease payments are about 50% lower than loan payments for the same car, same term.
Why it that, you might ask? Why is Honda such a good brand to lease?
Let’s briefly list some of the reasons and then explain them.
1. High residual values
2. Low money factor (finance rate)
3. Frequent special limited-time lease deals
4. Lenient lease-end “wear and tear” policy
5. No lease-end disposition fee
6. Reasonable front-end acquisition fee
7. GAP protection is included in lease
1. High residual values – The Honda brand has legendary reliability. High reliability means high resale values. High resale values means high lease-end residual values. Finally, high residual values mean low monthly payments. The best “leasable” cars are those with the highest residual values.
Our sister web site, LeaseGuide.com, has just been completely redesigned and updated. It’s definitely worth a visit for anyone who is thinking about the possibility of leasing their next car — or are wondering if leasing is right for them — or is currently leasing.
The site was started about 15 years ago and became the most authoritative and most visited web site about car leasing. Although it was partially updated many times over the years, this is the first time it has been totally redesigned and updated.
So, what does it have to offer?
First, is the Lease Guide which is a 15-part comprehensive guidebook to car leasing. It covers everything from simply explaining the concept of leasing, to how to determine who should lease and who shouldn’t, to the pros and cons of leasing, to how leasing actually works, to explaining the “secret” lease payment formula, to how to handle the end of a lease.
Sticker price is one thing, actual selling price is another. Most new cars are sold at prices below MSRP sticker price. However, it’s easier to get good deals on some car brands and models than others, depending on available incentives and willingness of dealers to offer discounts.
The cheapest new cars are generally small cars such as the Honda Fit or Nissan Versa. Although small, these cars are very practical, economical to drive, inexpensive to insure, and actually very safe. Because they are so maneuverable and easy to park, they are great for city or campus driving.
In the list of cheapest cars below, we show you the MSRP (sticker price), including destination charge, for the least expensive version of the model, then show you the TrueCar price that a customer should actually pay for that car.
Car buyers often ask if the great new car deals being advertised on TV and in newspapers are some kind of “bait-and-switch” scam by dealers and if they can actually expect to get the deals if they go to a dealer.
The short answer is, yes, these are legitimate good deals and are not dealer scams.
Car companies are very competitive and want to attract buyers with promotional deals. The companies actually lose money but consider it a good investment if they can win customers. It’s simply part of the cost of doing business.
Car incentives can come in the form of cash-back rebates, loyalty bonuses, low-interest loans (even 0%), and special lease deals.
American car makers typically have the biggest and best rebates, and low-interest loans. European companies, such as Mercedes, don’t often have large incentives with the exception of BMW, which frequently has great lease deals on nearly every model. Asian (Japanese and Korean) companies are most likely to have the best lease deals. Low-interest and zero-percent loans are very common these days since “normal” new-car interest rates are already low — around 3.0%.
So what’s the catch?
One of the best ways is to find rebate deals like the ones we talk about on this web site because a rebate can be, and usually is, applied as a down payment.
For example, if you find a vehicle that currently has a promotional rebate of $3000, that money can be used in place of an actual cash down payment. In most cases, you would need no other down payment cash — zero down payment from you, thanks to the generosity of the car company. If you are short on cash, this is a great way to get a new car with no money down.
Another popular way to avoid a down payment is to trade a vehicle. The credit you receive from a dealer for the vehicle can act as a down payment towards the purchase of a new vehicle. There would be no need for additional cash from you. This assumes your trade vehicle is fully paid off or that your loan balance is less than your trade vehicle is worth. If your loan balance is higher, you are “upside down” and may have to make a larger down payment than you would otherwise have to make.