Negotiating a Lease Buyout

Just like any other type of car loan, the amount of a lease buyout is not necessarily carved in stone. Dealerships have the power to lower the total amount of money you pay on your lease buyout, but you have to be willing to do a little haggling. The paperwork you signed when you first leased the car may have specified certain terms for a future car lease buyout, so you probably won't be able to go against anything specified in paperwork you already signed. You want to make sure that you don't walk into the dealership with an eager demeanor which lets everyone know that you absolutely want to buyout the lease. Use all the usual tactics you would use when negotiating a car loan. Obviously the dealership has the upper hand in this situation, but this should not stop you from trying to save some money on the loan. As with all car loans, you should secure financing before you even walk into the dealership. Check with your current lender to see if they give lease buyout loans.

Comparing Lease Terms

Wondering where you can get the best car lease terms and rates? Check out Leasecompare.com. This online service will compare lease payments and terms from multiple lenders on all makes and models of cars, including Hyundai, Nissan, Pontiac, and Dodge. You can actually complete the lease application online and save yourself time as well as money. The site offers three service levels:

• Express- for those who've already found a car and dealer
• Step-by-step- for those who have yet to find a car and need help negotiating the best terms
• By-payment- for those who want to see what's available within a certain payment range

*Express can be used for both new and used cars. Step-by-step and by-payment apply only to new cars.

Dealer Incentives & Rebates

A while back, when the auto industry and the U.S. economy in general were in the dumper, auto manufacturers from Chevrolet to Volkswagen were offering dealer incentives such a zero-percent financing, no money down leases, and rebates galore. Consumers became spoiled, and now many won't even consider a purchase unless they get a bon-bon from the dealer.

Let's say you are considering leasing a Ford Mustang. The dealer has given you the choice between a discounted interest rate on your new car lease or a cash back rebate. How do you know which is the better incentive? Try a specialized website (like Edmunds.com) that offers a decision calculator on its Web site to help you crunch the numbers. Plug in a few pieces of data and you'll know within seconds which is the better deal for you.

Free Credit Reports

Before you shop for a new car loan, you should get a copy of your credit report and take steps to improve your credit rating if it is below 680. Credit ratings of 680 and higher qualify for the best financing deals. There are three credit reporting agencies:

• Experian
• Transunion
• Equifax

A recent amendment to the Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting agencies to provide you with one free copy of your credit report each year. The program is being phased in based on geographical location. For example, residents of the Northeast don't qualify for a free report until September 2005, at the earliest (this is to make sure the credit reporting agencies don't get overwhelmed with requests).

Aside from car shopping, privacy experts recommend you rotate your requests with the three agencies and get one report from each at four-month intervals to make sure no one is opening new accounts in your name without your knowledge. For more information on free credit reports, visit the Federal Trade Commission's Web site and search on "free credit report."

Choosing an Auto Financing Company

How do you decide which auto financing company to obtain a car loan through? There are several different methods you can use to find the lowest interest rate. Web sites like BankRate.com offer instant comparisons of interest rates for many auto financing companies. A good place to start, however, is with the bank or credit union with which you already do business. If you have a bank account at one bank and a savings account with another, check with both to find out what type of interest rates and terms they offer for their auto loans.

The loan process will probably be easier if you go with a financial institution that already has your information. If the financial institution you do business with does not have an attractive interest rate, then your next step should be to check out the aforementioned interest comparison Web site to find the best interest rate available to you. Be sure to use caution when applying for an auto loan with a lender you have never heard of. A quick check with the Better Business Bureau is a good idea before supplying your personal information on an application.

Don't discount the idea of obtaining financing through a car dealership either. But before you go to the dealership, do your homework. Getting a pre-approved auto loan before you buy can result in a lower interest rate.

Auto Financing Calculators

With so many different auto financing calculators available online, it can sometimes be difficult to decide which one to use. An auto financing calculator on a complicated financial Web site will more than likely give the same information as a calculator on a lender's Web site. There are variations on auto loan calculators. Some will automatically input an annual percentage rate (APR) into the calculation, while others allow the user to manually input the APR.

Your best bet is to start with the calculator offered by the lender you plan on using for your auto loan. If you haven't yet decided on a lender, you can use the calculator provided by the bank you currently do business with, or you can head to a financial Web site like BankRate.com and use the loan calculator there. Although auto loan calculators are designed to only give estimates of future car payments, the information they produce is fairly accurate and can be a valuable tool when planning your next auto purchase.

Bad Credit Auto Financing

If you have bad credit and you are shopping around for auto financing, you have probably noticed that not every lender is willing to grant financing to applicants with low credit scores. This may have led you to check with lenders that you are not particularly familiar with, or that you have never even heard of before. You need to take care to not get talked into paying extra fees and a higher interest rate than you need to.



Be on the lookout for things like application fees, prepayment penalties, and additional insurance such as life insurance and disability insurance. Some lenders who finance people with bad credit will add these types of things to auto financing to make even more money from the transaction. No matter how low your credit score, you can probably find bad credit auto financing which does not include all these extras. You cannot expect to obtain financing with a low interest rate when you have bad credit, but you should be able to find an auto loan which does not include plenty of extra fees.

Online Auto Financing

Not all lenders are created equal, so it is important to never assume that one lender will have the same rules and regulations regarding online auto financing as another lender. For example, many lenders allow for borrowers to obtain auto loans for new and used cars without any sort of down payment, but not all lenders do this. Some lenders have very strict down payment regulations which specify the amount of money a borrower must put down on the purchase of a car. Other lenders have no application fee or origination fees, while there are some lenders who charge not only an application fee and an origination fee, but who also tack on prepayment penalties and other costly fees. The point is to never assume that a lender will do things a certain way simply because that is the way you are accustomed to other lenders doing things. Always read the fine print, and if a lender does not do things the way you want them to then move on to another lender. Buying a car is expensive enough; you shouldn't pay extra fees if you don't have to.