Specials
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Leasing Specials |
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Clearly, auto leasing is rapidly becoming a more popular way to “finance” a vehicle in recent years. As previously stated (see home page), leasing accounts for almost 35% of total auto sales in America. To put that number into perspective, approximately 14.5 million vehicles are sold each year in America...meaning just over 5 million vehicles are leased each year! Staggering considering that just 8-10 years ago that number was just topping 2 million. So why the shift in auto financing? Which is the best option for me? What’s the difference between leasing and buying/purchasing? What else should I know about auto leasing? We hope to address and answer these questions below so that you will have all the information necessary to make a more educated purchase on your next vehicle. If we haven’t answered all your questions or concerns, please complete the simple form at the bottom and one of our lease consultants will contact you to address your questions or concerns. Is Leasing or Purchasing better for me? Leasing and purchasing are basically just two different ways to finance an automobile. At a very basic level, when you lease you finance the “use” of the vehicle and when you purchase you finance the “purchase” of the vehicle. As independent lease consultants it would be easy to say that leasing is always the best financing option. In reality it’s not that simple as it depends upon your particular requirements, personal situations, preferences, etc. Our knowledgeable leasing consultants can analyze your situation and vehicle requirements to help determine if leasing works for you or if a purchase might fit you best. When trying to determine which financing option is best for you, our leasing consultants will use the financial comparisons along with your individual requirements of the vehicle to determine which is the most cost effective financing plan. What is the difference between leasing and purchasing? When you purchase, you agree to pay for the entire cost of the vehicle, regardless of how many miles you drive, wear and tear, economy, etc. Typically, you will be asked to pay some type of down payment plus sales taxes and title fees, or you can roll all that into the loan. You agree to pay the bank some amount of interest for loaning you the money and your first payment is normally due 30-45 days after you sign your paperwork. When you lease, you agree to pay for only a portion of the vehicle’s cost...basically, you are paying for the part of the car that you use over your lease term. Just like with a purchase, you can pay the taxes and fees upfront or roll them into the lease. With leasing, your first payment is due when you sign your paperwork...30-33 days later you will actually be making your 2nd payment. Example of why leasing yields lower payments For example, lets say you are contemplating leasing or purchasing a $50,000 car. Lease: Bank says its worth $27,000 after 3 years, so your payments are based on you paying the $23,000 difference (we call it depreciation), plus the leasing company’s finance charges and fees. Purchase: You pay for the entire $50,000 over the 3 years, plus the bank’s finance charges and fees. This is the reason more and more people are leasing today. If you’re only paying for the part of the car that you “use,” your payments will be much lower than if you are paying for the entire car over your finance term. Is it possible to lease a pre-owned car, truck or SUV? Absolutely. With the increasing cost of new vehicles, pre-owned auto leasing is becoming a viable option for many auto consumers. Your mileage liability begins with the existing mileage of the vehicle at the time of signing not at 0, so you are not responsible or liable for the mileage at inception. With our nationwide affiliations, we can frequently locate current year pre-owned vehicles with very low mileage and save you money as compared to a new vehicle. Are my repairs and/or maintenance covered when I lease? This is a common misconception about leasing. The way you purchase/finance a vehicle, has no bearing on repairs and/or maintenance. Regardless of how you finance your vehicle, you are always responsible for your own repairs and maintenance. Of course, all new vehicle have different factory warranties and may luxury cars will also include normal scheduled maintenance over a specified amount of time (please contact one of our leasing consultants for more details information). Do I have to pay for “Wear & Tear?” When you lease, you are responsible for what is considered normal “wear and tear” if you keep the vehicle until maturity. Meaning, if you keep the vehicle for the entire term of the lease and you decide to “walk-away,” then the leasing company will assess you for any excess mileage over what was specified on your contract, plus any additional wear and tear on the vehicle (i.e. bald tires, cracked or excessively chipped windshield, ripped/torn seating surfaces, body damage, electronic malfunction, etc). Why should I pay for excess mileage when I lease? Remember, when you lease you agree to pay for the part of the vehicle that you “used” during the lease term. Example: Same $50,000 car leased for 3 years Anticipated mileage at the end of the lease = 45,000 (or 15k miles/yr) Your payments are based on you “using up” the depreciation of the vehicle, assuming that when you turn it back into the leasing company in 3 years, it will have 45,000 miles. Let’s assume you actually drove 17,000 per year and the car now has 51,000 miles after 3 years. What you have really done is “depreciated” the vehicle by an additional 6,000 miles, but you have not paid for that part of the usage. So when you turn in the vehicle after 3 years, you now owe the leasing company for the additional part of the car that you used during your lease. This is what you are really paying when you are charged for excess mileage. Note, this is only assessed if you keep your vehicle until lease maturity and exercise your option to walk away. If you elect to sell the vehicle, or trade it in early, or keep it and pay the left over portion, then the leasing company does not charge you any mileage fees. Do I have to pay extra for GAP insurance or is it included in my lease? In the event that your new or pre-owned vehicle is totaled or stolen and your insurance company has to make a pay-off, if there is any difference in what you owe the bank vs. what your insurance company pays off, you are responsible for that difference. GAP insurance pays that difference! In today’s auto market with zero down specials, and 0% financing, and 6-12 months until your first payment is due, most auto consumers will actually owe far more that their car is worth for the majority of the time that they finance. Most auto leases have built-in GAP insurance...it is almost always included at no additional charge to the customer. Most purchases do NOT include GAP insurance. However, in most states it can be purchased from the Finance Manager at a prescribed amount. What is the difference between an “Open-End Lease” vs. a “Closed End Lease?” This issue can get very convoluted so here is a brief summary of the two types of leases: Closed End Leases This is the most common consumer auto lease today. Because you have the option to “walk away” at the end of the lease, the leasing company assumes all the risk in the depreciation of the vehicle. Simply, here’s how a closed end lease works: You pay a specific lease payment over a specified term as spelled out on the lease agreement. At the end of your lease term (called maturity), one of your options is to “walk away” from the vehicle. If the real value of the vehicle is less than the remaining amount owed on the vehicle (called the residual), then “walking away” is a great option. When you exercise your right to walk away, the bank agrees to pay off the balance owed on the car (this is called the “residual”). The bank takes the risk for any depreciation (loss of value) that the vehicle incurs over the lease term. Your only financial responsibility at this point is for any excess mileage and/or wear and tear. Open End Leases The biggest difference from a closed end lease is that there is no guaranteed “residual value” specified on the open end lease contract...meaning the leasing company is not going to assume the potential loss. They refer to this as an “estimated future value” in most cases, and if the real value of the vehicle is less than their stated “estimated future value,” then you as the customer are responsible for that difference. The liability and potential loss is then transferred to the customer rather than the leasing company. Please consult with our leasing specialists for additional differences. In short, most of our leasing are CLOSED END LEASES...thus limiting your liability and potential loss. However, for many business owner, open end leases are actually of benefit (see below). Do you offer Business Auto Leasing? Yes. Although the approval process is far more stringent, we do offer business leases. If you are wanting to lease multiple vehicles all at once, these will usually be Open End Leases rather than Closed End as most businesses tend to put more than average mileage on any given vehicle...and wear and tear is usually above average also. However, if you are leasing 1 or 2 vehicles but want to title and lease them under your company name, this will remain a Closed End lease in most cases. Most leasing companies now will require that an officer of the company sign along with the business as a personal guarantor. Please consult with our leasing consultants if you are interested in a business lease...or click here to request a business lease quote. Please be sure to specify that you are wanting to lease this under a business name in the Comments sections. What are my options at the end of my lease? Unlike conventional financing, you have 4 options to consider at the end (or maturity) of your lease: Purchase your leased vehicle: In a closed-end lease, the purchase option price (or residual value) is spelled out on the contract. If you want to keep the vehicle, you can simply pay cash or refinance that specified amount. Sell your leased vehicle: Contrary to popular consensus, you can sell a leased vehicle at any time, as with a conventional finance purchase. You will still be responsible for paying off the bank before the title can be transferred to the purchaser. Trade-In your leased vehicle: Based on the actual value the vehicle vs. the projected value (residual), trading in the vehicle is oftentimes an option that is overlooked. However, in most states and depending upon the lender, you may have some tax savings for trading in the vehicle early. Walk Away Option: In a closed-end lease, you have the option to walk away and turn in the vehicle. Your responsibilities will include any excess mileage beyond what was specified on your lease contract agreement, any excess wear and tear, and the termination/walk-away fee (also specified on your lease contract). LEASING ADVANTAGES IN SUMMARY: Lower monthly payments compared to conventional financing Leasing means you only pay for the portion/life of the car you “use” Leasing allows you to drive the car of your dreams & not just settle In other words, you have the ability to drive a more expensive car for less Leasing keeps more of your cash available for other investments/purchases Leasing increases the potential for tax benefits (see our leasing consultants for details) GAP coverage is automatically included in all of our leases (at no added cost) No money down with approved credit SCM Auto Leasing can customize a lease to fit your requirements
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