With all of the new safety, style and efficiency improvements that have and will happen, Leasing allows you to stay current and up to date and also allows you to plan as the costs are predetermined and fixed.
2. Gap Protection
Is included in the acquisition fee so that in the event of a total loss, the whole balance of the lease/residual is paid off, regardless of the actual market value of the vehicle, which is all that your casualty insurance will pay.
3. Help in borrowing
The entire debt does not show on a balance sheet; the amount shown is only a fraction of the selling price.
4. No depreciation risk
The guaranteed future value of the vehicle is the amount deducted at the beginning of the lease. It is also the expected value of the vehicle at the end of the lease. You have the term of the lease to decide if you want to purchase, trade or turn it in at the end of the lease.
- If the guaranteed future value compared to the actual market value at the end of the lease favors you, you may purchase it or trade it using the equity towards your next car.
- If it doesn't favor you, you simply turn the vehicle back to the lessor.
5. Sales Tax Savings
The only thing better than a tax deduction is never having to pay the tax in the first place.
The tax advantage of leasing is that you only pay tax on the monthly payments on the amount between selling price and residual value. The residual value is based on the MSRP. This is what makes the lease attractive as the payments are based on the difference between selling price and residual value, not the MSRP.
For example, on a $45,000 car with a 58% residual, you would pay tax on the difference between selling price and residual vs the whole $45,000. As an example, say the $45000 car is discounted to $41000, you pay tax on $14,900.
The tax is paid in the monthly payment rather than all up front at time of purchase.
Common Objections to Leasing
1. "I won't own it. I have no equity."
That's good, not bad! You won't have any equity because you won't pay for any equity. That's why your payment is so low. In order to have equity in the vehicle, or own the vehicle, your payment would have been much higher. Instead of equity in the vehicle, you have cash. You can use this cash to buy the vehicle if you want, but you don't have to decide until the end of the lease. Some assets are good to own, like a house or stocks, because they have the possibility of appreciating.
Vehicles do not appreciate; they depreciate. Would you pay $100,000 for a house if you thought it would be worth $58,000 in three years?
2. "I've had a bad experience with leasing or someone I know had a bad experience."
It's true. Some people have had issues with leases. In most cases, it's because they opted for wrong mileage terms or it wasn't fully explained to them. We offer closed end leases, so there is never any question regarding the lease end value. In other cases, perhaps they had a charge back for abnormal wear and tear. We explain the condition the vehicle must be returned in up front. It also should be remembered that if they had purchased the same vehicle and drove the same number of miles, or traded it in the same condition, they would have experienced the same deductions.
We won't let that happen to you. We tailor the lease specifically to your needs and let you know what your rights and obligations are up front.
3. "I drive too many miles" or "I don't drive enough miles."
If you drive more than 15,000 miles per year you may not be an ideal leasing candidate. You do have the option of building the extra miles into the lease at .20 per mile or pay .25 per mile at the end of the lease. Which would you prefer?
.20 per mile is quite a savings for you. If you buy the same vehicle and drive the same number of miles, when you go to trade it in, they will deduct .25 to .30 per mile, over 15,000 miles, to get the appraised value. You can actually buy the miles you need cheaper in a lease than you can from yourself!
4. "I don't understand leasing."
Don't feel bad, very few people do. Worse yet, some think it is renting. Leasing is probably the most misunderstood consumer transaction in America.
Unfortunately, what has kept many people from leasing is the fear of the unknown.
According to a survey by J.D. Powers and Associates, once people have leasing explained and they try it, 93% of them are so satisfied they lease their next vehicle! We don't view leasing as just another way to buy a car. We view it more as an insurance policy. It removes the risk of the vehicle's depreciation. Leasing offers value; ownership does not.
Leasing gives you the ability to pay for the part of the vehicle you use, and give you a choice of "purchasing or trading it in using the potential equity" after you have driven it for a few years.
Click to see our lease specials.
Click to see our lease specials.