NOTE from Megan: Mark is a car dealer at Howdy Honda in Austin, Texas. He writes this post in response to Dave Erikson’s post on an over-the-phone leasing request from a dealer’s point of view. Mark felt that that post may have seemed to discourage potential leasers, so he wrote to set the record straight on why leasing can be a great benefit for some folks.
Leasing should be presented to a customer like a utility bill. And that it is not for everyone. I have hundreds of customers that lease from us every two to three years because they understand that their vehicle is a basic necessity in our society and an expense that is a monthly reoccurrence. The benefits to leasing are also something that would help customers on various levels.
Car Leasing Benefits
1) You will be driving a new vehicle every two to three years at lowest possible cost to you. With a Honda, since our vehicles have high residual values, you usually are only having to pay for 40 to 50% of the vehicle during the time you use it.
2) Because you are paying less for the vehicle each month – if your budget allows, you can drive a higher grade vehicle at the cost of a low vehicle. Or the reverse of that you can cut your vehicle monthly cost down to a minimum.
3) The warranty is in full force for the entirety of the lease and thus there is little to no expense for anything that may arise with the vehicle.
4) You will most likely not have to replace the tires – a $400 to $600 savings over owning the vehicle. Nor will you have to replace the cabin filters, a common up sell for service departments – another $120 to $200.00 saved.
5) You will always have the benefit of the latest safety features and systems. And of course you will always have all the latest gadgets too.
6) Parents of college students can get a low cost vehicle for their student’s college years while assisting them in building credit for their future purchase or lease.
7) All major insurance companies offer the same aggressive insurance rates on leased vehicles as purchased vehicles.
Car Leasing Tips
1) Go into the store with a firm understanding of what your monthly budget will allow for the monthly payment. If you have agreed that $350.00 is the maximum amount you will budget for a car payment, then stick to it. Start your search with a basic vehicle and only move up in creature features if it fits into your budget.
2) Know as exactly as possible how many miles you drive each year. (Leasing is best for 12 to 18K miles per year.)
3) Avoid putting money down on a lease except to meet your monthly budget. You can avoid any kind of hidden fees if you state clearly that you want to lease the vehicle for X $ per month for example – with all TTL and fees rolled in.
4) Avoid using most leasing calculators online – they will only throw you off because they cannot account for state and local fees or taxes. It will be a practice in futility and cause you extreme frustration. [Note from Megan: CarWoo!'s Out-the-Door Price Estimator does take these factors into estimating your costs.]
5) Read up on the vehicle you want for any dealer rebates, manufacturer to dealer incentives, and if there are tax credits in your state.
6) Be careful of term, a 36 month lease is best because it has all the benefits. 48 months is acceptable, but stretches you on all the benefits to a point that may start costing you more dollars. 60 month leasing is criminal and no dealer should ever suggest it to you. There is no way in a 60 month lease for you to come out ahead in an equity position.
7) Ask about trade value. In many states you can trade in a leased vehicle on another lease and receive a tax benefit.
In our society now people change cars about a frequently as they do their cell phones. Leasing is sensible and logical for that type of customer. They are always in the latest and greatest vehicle with all the latest safety features and benefits. They will enjoy a carefree drive with little or no cost.