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A Better Way About fifteen years ago, the automobile manufacturers had to find out why their customers were unhappy and why their sales were down. What they discovered was rather surprising. The problem was not that people had stopped wanting to buy new cars. The problem was that when it came time to trade in their current vehicle for the latest model they just could not afford to. Unlike their parents, who had always been able to finance their cars for only 24 or 36 months, they had to finance their vehicles for sixty, sixty-six, or seventy-two months (sometimes even longer!). Now, they still wanted to be able to trade as frequently as their parents always did. They could not because they simply still owed more on their trades than what they were worth. So they asked themselves, what if there was a way to pay only for the part of the car that you wanted to use? What if there was a way to have the low payments of a long-term loan but the easy trade-in of a short-term loan? The manufacturers decided that there was such a way: Leasing. But although leasing had been around for a long time, it wasn’t suited to most customers. When leasing was first introduced, it was offered mostly by independent leasing companies that tailored their lease programs for business and commercial accounts. Those leases included higher rates of interest, penalties for early termination, and other costs. In addition, most leases were sixty-month agreements. Now manufacturers offer leasing through their own finance divisions such as Honda Finance Services. The interest rates are very competitive, sometimes even below prime and there are usually no early termination penalties or other fees. Even the length of the leases have been shortened, to between 24 and 48 months. With leasing structured in this way, everyone wins. The manufacturers win because they know that their customers will be back to pick out another new car every three or four years without any of the hassles that come with long term loan payoffs and negative equity. Our dealership wins because we know that our customers will be happier being able to have the car they want with lower payments and shorter term commitments. We also get the first opportunity to buy their car at the end of the lease, giving us a great source of clean well-maintained used cars. Best of all, the CUSTOMER WINS because every two to four years they have the opportunity to drive the brand new vehicle of their choice with the lower payments they want and no trade-in hassles down the road. When could leasing be right You? · Little or no money out of pocket up front. While most leases require only the first month’s lease payment and the applicable title & tag fees at delivery, even those charges can be included in the monthly payment. · A lower monthly payment. Because you are only paying for the portion of the vehicle you expect to actually use during the lease rather than the total value of the vehicle, leasing payments are almost always significantly lower than purchase payments. You can also reduce the monthly payments further by paying a capitalized cost reduction (effectively a down payment) at the beginning of the lease. · More vehicle for the money. Leasing makes driving a more expensive vehicle, or a vehicle with more options, more affordable. Again, it’s because you’re paying only for the portion of the vehicle you expect to use during their lease. · No resale or trade-in hassles. When you lease, you can avoid the hassles of selling or trading your vehicle at the end of the lease; you may simply return the vehicle to the dealer. · A new vehicle more often. When you lease, you will typically have a shorter-term commitment as compared to traditional financing, allowing you to drive a new vehicle more often. · Sales & use tax advantages. There is usually a sales tax savings because the sales tax is paid monthly on the amount of the payment rather than on the entire purchase price up front. · If you use your vehicle for business, leasing may provide some tax deductions. We are not accountants, nor are we tax experts, so you should see your personal tax advisor or accountant for advice. When is buying right for the you? · Generally, if you plan to drive the vehicle for five or more years, or if you subject your vehicles to rough treatment, or if you plan to substantially alter the vehicle’s equipment, appearance or performance, or if for some reason you just feel more comfortable with the idea of “owning” a vehicle, then traditional financing is probably right for you. What is Leasing? How does leasing differ from conventional financing? Leasing is an option that lets you pay for the best part of a vehicle that you expect to use for a certain amount of time, plus a service charge (similar to interest), taxes and fees. For example, suppose that a vehicle has an original value of $40,000. The projected future value (or residual value) of that vehicle might be $19,000 in 48 months. The difference between the original value and the residual value determines the monthly payments. This results in a lower monthly payment with less cash out of pocket upfront and more flexibility at the end. Additionally, an individual can tailor the length of the lease agreement, the monthly payment and the yearly mileage allowance to his own circumstances. Compare this to conventional financing. The same vehicle will cost $40,000 plus interest paid out over 5 or 6 years. In most cases, a substantial down payment and higher monthly payments are required. More importantly, since most customers prefer to trade vehicles more often than every 5 or 6 years, conventional financing requires people to have to deal with a loan payoff and their vehicles resale value when it’s time to trade What are your responsibilities? · You are responsible for all the things you would be if you purchased the car such as Full Coverage Insurance, normal maintenance and non-warranty repairs. Since most lease terms are 48 months or less, almost all mechanical repairs are usually covered by the manufacturer’s warranty while normal maintenance is limited to such things as oil changes, tire rotations and other periodic services. You can even choose to pre-pay routine maintenance at lease inception. · Excess wear & tear. The leasing company expects normal wear & tear. Most leasing companies will inspect the vehicle at the end of the lease if you return it (rather than trading it in on another car or buying it outright.) and you are only responsible for any abnormal wear & tear. Acura Luxury Leases include a $1,500 allowance for excess wear & tear. This allowance is designed to offset minor damage or adjustments that otherwise would be an expense for you at the lease end. There are even insurance policies available to offset those costs as well. · Collision damage must be repaired before lease termination. However, any reduction in the actual value of the vehicle because of accident and repair is not your responsibility or at your expense. What about excess mileage? Acura Luxury Leases can accommodate as few as 10,000 miles per year or up to 99,999 miles over the full term of the lease. You are responsible for any miles driven over the total mileage limit. You can deal with excess mileage at termination in one of three ways: You return the vehicle to the leasing company and pay any charges in cash. You purchase the vehicle and the mileage charges will not apply. All that you will pay is the residual value plus taxes and fees. You trade the vehicle. The dealership pays off the lease just like in conventional financing. What should a customer look for when shopping for a lease? A guaranteed purchase price at lease termination disclosed up front & the amount of any disposition fee. Acura Luxury Leases do not require any disposition or termination fees. Gap protection. When an accident, fire or theft results in the total loss of the leased vehicle, there is typically a difference between your insurance settlement and their cost to end the lease agreement. Acura Luxury Leases include this coverage. What are some of the other benefits of leasing? Acura offers a special Acura Graduate Program for recent or soon-to-be college graduates. Convenient online account access and EasyPay automatic electronic bill payment through Acura OwnerLink. Leadership Leasing Loyalty program makes it easy and affordable to get right into another Acura at the end of the lease. Gatorland Acura 3435 N Main St Gainesville, FL 32609 352.373.0300 www.GatorlandAcura.com
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