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If you want to lease a car, it’s important to understand all of the fees and costs involved so that you can find the best deal for your situation.
One common leasing charge you may come across is an acquisition fee. Also referred to as an administrative fee or assignment fee, this charge covers the leasing company’s administrative costs, like pulling your credit reports and verifying your insurance coverage.
If you decide to lease a new vehicle, review your lease terms carefully to see how much your leasing company charges for the acquisition fee.
A lease-acquisition fee typically won’t be the only fee you face, but it can add a significant amount of money to your overall leasing cost. But if you go into the leasing process educated and well-prepared, you may be able to negotiate a discount on this fee.
- How much is a lease-acquisition fee?
- Where can I find the lease acquisition fee?
- Can I negotiate a lease acquisition fee?
- Next steps: Decide if leasing a vehicle is a good idea
How much is a lease-acquisition fee?
When you lease a car, the financing company can charge a fee to put the deal together. So like a bank may charge an origination fee on a loan, a leasing company may charge an acquisition fee for a new lease.
The fee usually ranges from $395 to $895, according to car-buying resource site Edmunds.com. More-expensive cars may come with a higher fee.
You might be able to pay the lease-acquisition fee upfront or bundle it into your monthly lease payments. Be aware that if the fee is hidden in what’s known as your “gross capitalized cost,” your monthly payment may be higher than if its paid upfront. When hunting for your next lease deal, plan ahead for this and other potential fees.
What are some common upfront costs when leasing a vehicle?
In addition to an acquisition fee, you might see charges for the first and last month’s payments, license, registration and title fees, freight charges, taxes and a refundable security deposit.
Where can I find the lease-acquisition fee?
The lease agreement, which is a legal contract, contains important details you need and should include the acquisition fee.
The leasing company, also known as a lessor, is required by federal law to provide written disclosures of certain costs and terms if the lease is more than four months long and meets other requirements. Be sure to read the fine print before you sign, and take the time to understand this information so that you aren’t surprised by any of these costs.
Can I negotiate a lease-acquisition fee?
If you plan to lease a car, get ready to negotiate. You can negotiate different parts of your lease, including trade-in value, vehicle value, interest rate and length of the loan, along with other fees and charges associated with the loan. This can vary from lender to lender as to whether it’s negotiable.
Whether or not you have success negotiating this fee, you shouldn’t stop there when trying to negotiate. In terms of how strongly you negotiate, treat a lease as if you’re buying a new car. Even though you don’t actually buy the car if you are only leasing it with no option to purchase, the value of the vehicle is still taken into account in a lease, as is the depreciation.
Make sure the capitalized cost (the vehicle cost) matches the best deal you can get. If your lease shows a lease-acquisition fee, you may either consider directly negotiating it or negotiate another fee in a similar amount to offset it if it’s not directly negotiable.
Next steps: Decide if leasing a vehicle is a good idea
Just like buying a car, leasing is a major financial transaction. The financial aspects of leasing a car work differently than when you buy one. A lease can come with lower monthly payments and usually has shorter terms than a typical car loan. But when the lease is up, you have to give the car back or buy out the lease, depending on the terms of your lease. Once an auto loan is paid off, or if you buy a car outright, you have the title and full ownership of the vehicle.
Consider the lease-acquisition fee, among other costs, when reviewing your lease agreement. If you play your cards right, you may even be able to save money by negotiating a lower lease-acquisition fee.
Even if you can’t get a dealer to lower its lease-acquisition fee, you can still negotiate other leasing costs, which could help offset that fee. Don’t blindly agree to pay all of the lease fees and charges when signing a contract. With the right focus on negotiating costs, as well as understanding all of the fees involved, you could save money on your next car lease and ensure you get the best deal for your situation.