Leasing my first car and haggling 101

Foreward

This was written in May 2014 when I did the lease.  I decided to post it here because I had read Philip’s great article about car leases recently.  He led me down a rabbit hole, and made me realize that down payments are terrible.  Anyway, here’s the original post (edits in green).

Introduction

I’ve never understood why people leased cars instead of buying.  Well I know these people are the type who wants to drive a new car every 3 years, and so they are willing to pay a premium for the privilege.  But that was never me; maybe I’m just too cheap, but I’d rather buy a used car and keep it a long time instead of a leasing a new car every x years.

So with that said, my wife and I were having lunch on Saturday with a friend.  Not sure how the topic came up, but she said that Nissan was leasing the electric Leaf for $150 a month.  I had been thinking about this car for a while since my wife commutes about 40 miles a day.  We spend about $150 a month on gas on her Hyundai.  It doesn’t take a math genius to realize this was a no-brainer then.  She could be driving a brand new Nissan Leaf for no extra out-of-pocket costs a month!  We then decided to stop by the Nissan dealership after lunch.

Nissan Dealership

When we got there, a young guy named Skylar helped us in test driving a Nissan Leaf model S (the cheapest line out of the 3.  The SV adds GPS and the SL adds GPS, leather, and 4 way camera.)  After test driving, a manager came by and asked if we wanted to buy one.  Imagine an unfunny Chris Farley meets used car salesman.  His name was Randy of course.  I told him, “Well, I need to run the numbers to see which one I wanted.”  He goes, “No, you need to pick ONE so I can run the numbers on that specific one for you.”  Okay then.  He comes back with a printout of the current national deal which is $1999 down and $199 a month for 3 years.  He said that the national deal excludes fees etc and doesn’t include the ‘quick charger’ that the car we picked out had.  So he said for the car I wanted, it would be $3,100 down and $258 a month for 3 years.  That comes out to $344/month ($3100/36 months = $85 + $258 = $344, excluding time value of money), which was a whole lot more than the $149/month I had expected.  At that price, I told him it wasn’t worth it.  He could see I did not like that price.  He then scratched off the $258 and wrote $199/month.  Now that’s when things started to get interesting.  The new deal was now worth $287/month.  That perked me up, but after a little bit, I told him it still wasn’t worth paying ~$150/month more than what I’m paying now for gas.  He then asks, “Okay, at what price then?”

Let the haggling begin

Now I knew this is when the fun begins.  Some people hate haggling.  I actually do too, but I’ve been to Vietnam so many times that I’ve gotten a hang of it.  My downfall in haggling is I usually just go, “Okay, I’m willing to pay X for this.  If not, I’ll pass.”  I don’t usually go back and forth, and sometimes I lose out because I didn’t start low enough.  So back to the story.  I tell Randy, “I think the car is only worth paying an extra $100 per month from what I’m paying for gas now, so my counter is 3K down, and $150 a month for 3 years.”  This equates to about $240/mo not factoring in time value of $3K down.  He then goes to the back once again for about 5 minutes and comes back with, “Okay we can do $3K down, $178 a month for TWO years.”  This threw me for a little loop, but once I ran the math on the new deal, it came out to $312/mo, which is actually worse than the 3 year deal.  However, this deal only had a 2 year commitment, which in a lease is better since you could “upgrade” sooner.

Parking perk

Because his new offer was about equal to the last offer, I knew we were near their floor price.  At this point, my wife tells him that she actually parks off campus for work, and that the parking garage on campus just installed 4 new charging stations, but she wasn’t sure if she could park there.  If she could, she’d gladly pay the extra $150 a month for having the Leaf.  But that garage was restricted to tenured employees and carpools.  The salesguy is then so confident that she could park there that he goes, “How about this?  If you can’t park there, we’ll take the car back.”  I gave him a confused look, “Huh?  You’ll take the car back?”  He goes, “Yeah, you’ll basically have the car for free for 2 days.”  There was more hesitation on our part just because I didn’t want to deal with the paperwork.  He then goes, “You know what?  You can return the car and I’ll GIVE YOU $200.”  At that point, I was even more shocked.  I think my wife and I figured she had about a 50/50 shot of parking in the garage.  I think he knew though that if we left w/o a car today, we most likely were not coming back, which was probably true.

Check and mate

With that new premise, I ran the math again on my calculator.  And this is where I made my fatal chess move.  In my last counteroffer, I divided $3100 by 36 instead of 24 months and so I countered with 3K down and $162/month, which still amounted to $291/month when I THOUGHT it was $250/month.  He walked away and I realized my mistake immediately.  I told my wife, “Oh shit, I divided the 3K by 36 instead of 24.”  And that’s when he came back in literally 1 minute, and said, “WE GOT A DEAL!”

But oh wait Randy

Fast forward to Monday and we find out that my wife couldn’t actually park in the garage.  So we go back to the dealership and met up with Randy.  I told him I had 3 options – 1) Upgrade to a Leaf with nav for same payment, 2) Keep the Leaf and lower the monthly payment or 3) Return car outright.  He immediately said #1 wasn’t possible and wanted to see how I could keep the Leaf.  This negotiation went pretty easy since I told him I only wanted to spend +$100 more than gas, so $250/month.  I told him to keep the 3K down, but wanted my monthly payment to be $120.  He walks away and comes back and goes, “Can you do $135?”  I shook my head and said, “Nah, it’s not worth it.”  He then runs through a lot of options like, “Can you do $130?”  “Can you do $135 and I personally mail you a $10 check every month?”  Confused look on my face, “You personally?  Why?”  He goes, “So the sales guy can keep their commission.”  I hesitated some more on that shady deal.  He goes, “How about if I give you 2 gas fill ups for your other car?”  I said, “2 PER MONTH?”  He goes, “No, total.”  Me, “Eh, that’s about $5 a month.”  After a while of this, I told him, “Sorry, I’m pretty firm at $120/month.  If not, we’ll just return the car.  But I like the car and if you have another promo at XMAS, I’ll be back in.”  He goes away for 5 minutes and comes back and goes, “Okay, $120 it is.”  He thanked me for giving him a chance of keeping my business, but it was clear he was NOT happy.

Conclusion

At that point, he went to help another customer and I tried to avoid eye contact with him after that.  And our initial sales guy, Skylar, waited AN HOUR with us for the finance manager to get done with other customers.  I felt bad for him since it probably ate out of his commission.  It was awkward talking to him too, but he seemed upbeat for the most part.  So after everything is said and done, I’m paying $250/mo for 2 years for the Leaf which is $100 a month EXTRA cash outlay over gas.  I think Randy’s arrogance of the parking garage cost him the deal as much as my math error cost me the initial deal.  Let me tell you that both trips wasted about 4 hours of my life (2.5 the first time and 1.5 the 2nd) and exhausted me.  I don’t recommend car haggling as a hobby.  However, I do enjoy the Leaf a lot!

Postscript 

If you haven’t realized by now, you should NOT have done what I did.  I came in to a car dealership with no information, and information is power when negotiating.  Read the comments and Philip’s article for what you SHOULD do.