The Best Time to Lease a Car: Helpful Guide
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In recent years, car lease costs have increased as much as 26%—with an average increase of $1,965 over the life of the average contact. But it’s still possible to secure a stellar lease for a modest price. The secret? Knowing the best time to lease a car.
In this post we review the best times throughout the year to lease a car in order to get the best deal possible.
Table of Contents
When Car Manufacturers Release New Models
Between July and October, right after most manufacturers release new models, is an ideal time to shop for a new car lease.
Why? It all comes down to the car’s residual value, its estimated value at the end of the lease term. All vehicles depreciate (lose value) over time. Car dealers subtract the projected depreciation from the car's current value to calculate its residual value.
They typically estimate how much value a car will lose using the Automotive Lease Guide (ALG)’s Residual Percentage Guide. Mileage and age play a significant role in setting residual values, but vehicle model and type are also factors.
The lower a vehicle’s residual value, the higher your lease payments will be. That’s because you have to pay for any value lost during your lease term.
Right after the manufacturer releases new models, prices on their previous models drop and there are usually more attractive lease offers on them. However, those vehicles' resale values are often still relatively high, providing the perfect combination of residual value and negotiation power.
End of the Month
Most auto dealers have a monthly sales quota, so they’re more likely to offer discounts toward the end of the month to boost those sales numbers.
Try approaching dealerships in the last 2-3 days of the month. You just might be able to negotiate your way to a bargain price.
ALSO READ: Tips on Negotiating a Car Lease (Like an Expert)
End of the Year
If you're flexible with when you need to lease a car, why not try waiting until the end of the year? In addition to monthly quotas, dealerships often maintain quarterly and year-end sales goals.
If you catch an auto dealer just shy of their quarterly goal, you could snag a great deal. This tactic might require visiting multiple dealerships, but the payoff will likely be worth it as you can leverage greater negotiating power.
Holiday Sales
It can also help to make leasing inquires around specific holidays, such as:
Like any consumer good, car leases receive a hefty discount during the holiday season—but be sure to read the fine print. Many of these festive deals hinge on restrictions, such as non-negotiable mileage limits. However, manufacturers release new lease deals usually at the beginning of every month.
Car Leasing Tips
- Know your budget and credit score. It's advisable not to agree to a payment that exceeds 35% of your monthly income. You’ll likely find 10-15% a more comfortable range. This budget will help determine the model, lease term, and mileage you should aim for when shopping around. Brush up on your credit score before browsing lease options, as well. A higher credit score (700+) typically results in lower interest rates. Knowing your credit score will help you determine whether a leasing company will accept or deny your application and allows you to understand your negotiation power better.RELATED: What Exactly is a Well-Qualified Buyer?
- Consider the car's residual value. As we discussed, the car’s residual value — or its estimated value at the end of the lease — will impact your payment amount and lease conditions. For example, if your residual value is half the car’s Manufacturer Suggested Retail Price (MSRP), and the MSRP is $50,000, then the residual value will be $25,000. In addition to timing your lease near new model releases, seek out makes and models that have historically maintained their value. The Kelley Blue Book Best Resale Value Awards are an excellent resource in this regard. For instance, in 2020, Subaru and Toyota hold many of the top spots.
- Know the best time to lease popular car models. As we previously discussed, understanding the right time to lease a car is key to favorable terms. Aiming for just after a new release and at the end of the month or sales quarter is a solid start, but you can dive deeper by considering specific factors. When is business likely to be the slowest in your area? That's when you want to look for a lease. Wait until dealerships are staring down at low sales numbers and facing quotas and use that as leverage to score an incredible deal.
