Posted on February 20, 2015
Whether you choose to finance, lease, or pay cash, a vehicle is a depreciating item and not a investment. An automobile in most cultures is necessary to get from point A to point B. We all know what happens when you drive a new vehicle off the dealers lot. No matter how fantastic of a deal you negotiated, you will never be able to turn around after buying that vehicle and sell it back to the dealer for the price you paid. Once ownership is transferred from the dealership, legally it becomes a used vehicle. There is a cost associated with driving a new vehicle. Leasing can shift some of that financial risk.
Most of my customers are very payment conscious. I am seeing more and more customers stretching their financing to 72, 75, and even 84 months, in order to get a more affordable payment. As a professional sales consultant, it is my obligation to present my customers with all available options. That is why, I always present leasing, as a alternative to traditional financing. Leasing offers my customers a more affordable way to drive the new vehicle they want, while shifting the financial risk to the lending institution.
I drive an average of 20,000 miles per year. At the end of my 12,000 mile per year lease, I will be over my mileage by 24,000 miles and have to pay a penalty.
That is correct, however, I would ask you to consider the value of that 60,000 mile vehicle. Is that vehicle worth any more or any less because you leased? So if your like most of my customers that trade every 3 or 4 years, you will have to deal with the equity or inequity, whether you leased or financed traditionally.
Unless you pay cash for your vehicle, do you really own it? Leasing however, gives you the best of both worlds. At lease maturity you have 4 options vs. when you finance traditionally, you can only hope the value is close to balanced owed.
Buy It – If you absolutely love the vehicle you may purchase it for the guaranteed future value.
Sell It – For more than the guaranteed future value and pocket the profit.
Trade It – Use any equity to reduce your new lease/loan.
Turn It In – If the vehicle is not worth the “guaranteed future value”, you have shifted your financial risk to the leasing company, provided you are within the mileage parameters of the lease.
The great thing about leasing, is when you have your vehicle repaired at a authorized repair facility, you can turn it in and not worry about diminished value. When you trade your vehicle, the dealer will always take into account diminished value. Once the dealer discloses the accident, most buyers will expect to pay less for a wrecked and repaired vehicle vs. a one owner vehicle with no accidents. When you turn your repaired lease vehicle in, you do not have to worry about diminished value.
When a buyer is evaluating your vehicle they will take into account vehicle condition. When looking up your vehicle values on websites like kbb.com and edmunds.com there are categories for vehicle condition. Leasing companies are sometimes more lenient when you choose to re-lease. They have great products available when leasing, to reduce or eliminate those wear and tear costs (see dealer for details).
Toyota does not require increased insurance limits when leasing a vehicle.
I understand how you feel and a lot of my customers say the same thing. Back in the 80’s dealerships were doing open ended leases and the “guaranteed future value” was based on dealer discretion. Today, leases are closed end and the customer knows exactly what the “guaranteed future value” is and can calculate if leasing is a better alternative than buying.
I get this a lot and I always ask my customers to consider their past trading history. Most of the time when the new models come out, it is only human nature to want the fresh updated model. Leasing offers you flexible options.
Fact: – Over 70% of people in the automotive business “Lease” their vehicles.
I admit that leasing may not be for everyone, however a trainer of mine (KC Nix) shared with me that “Math is Absolute!” Math is not emotional and leasing is math. If it makes sense after doing the math to buy vs. lease or vice versa, I encourage you to do so.
I would like the opportunity to review with you, the flexible options that leasing offers. Assisting you with your next vehicle purchase or lease, would be my honor. Click here to contact me via email or call/text me directly at 270 779-2819.