© WG & Associates 2014 Made with Xara Leasing Basics How Leasing Works Auto leasing is a way of obtaining a vehicle for a defined period of time and addresses many drivers' day to day needs. Since the terms of the average auto lease is shorter than that of the average auto loan, it allows you to move onto your next car more quickly and generally before the new car warranty expires. Also, lease payments tend to be more affordable than loan payments. Most vehicles are financed with a loan, and to keep those payments as low as possible, we tend to take out a five-year term to pay for our new purchases. The vehicle is a depreciating asset; that is, it loses value over time and some makes and models depreciate faster than others. The car you now own, and may no longer want, may not be worth as much as you think when you try to trade it in. The cost of the lease is really the difference in the purchase price and the price available to you at the end of the lease, plus finance charges when applicable, divided by the number of months in the lease. Top Reasons to Lease • No large capital expenditure: Except for a security deposit, which is refundable upon completion of the lease. A lease uses the funds of the lessor. In many cases, a down-payment is not required. • Lower monthly payments: All vehicles depreciate over time. A lease recognizes this fact up front. Rather than operating under the assumption that a vehicle is worthless, a lease payment will be calculated on the difference between the vehicle's original value and it's expected value at the end of the lease term. The benefit to you is a reduced monthly payment. The vehicle's value, the term of the lease and it's expected re-sale value based on your driving needs will all affect the monthly payment. • More vehicle: If you have a fixed budget for your monthly car payment, a lease will allow you to drive a more expensive vehicle than would other financing alternatives. • Service Assistance: Because leasing companies purchase large numbers vehicles they are treated as fleet customers by the automobile manufacturers. Often, as large volume customers they are able to get special consideration for their clients in matters involving servicing and warranty claims. • Hassle free shopping: We are able to find the exact vehicle you want, and/or suggest alternative choices for your consideration. • You only pay tax on the monthly payment, rather than up front on the full price of the vehicle.  That adds up to big savings • Down payment is flexible. • Trade-ins: Your existing car will be applied as a down-payment on your new vehicle therefore reducing your monthly obligation. • Drive new for the price of used. • Pride in driving an affordable new vehicle more often (every 2-3-4 years). • Peace of mind of knowing your vehicle is under a new car warranty. Even better if you turn the vehicle in before the factory bumper-to-bumper warranty expires, and you never have to deal with mechanical difficulties. • Leasing does not affect your ability to borrow for your business because a lease unlike a loan is neither an asset nor a liability. • If you lease a car, you may be able to deduct more from your tax obligation, while considering any tax restrictions relative to your employment, business-use, or a percentage attributed for personal use.  Your accountant will be able to advise you on your own situation. An additional benefit to leasing is that you also have options when the lease is over: you may hand in the vehicle for disposal on your behalf and not have to worry about negotiating its trade-in value, buy the vehicle, re-lease the vehicle, or use any equity as a trade-in. Keep it If you love your vehicle and don't want to part with it, simply buy it for the guaranteed residual price (which is generally a wholesale price) or extend the lease (subject to credit approval). Trade it If you decide you want a new vehicle just trade in the old one.  If the trade value differs from the residual value, the difference is yours to apply to your new vehicle. Keep the Profit If we sell the vehicle afterwards, for more than the guaranteed residual price, the excess is yours to keep (open ended lease). Return it If market conditions change or if you just don't want to trade or sell it, then based on the lease term & condition of the returned vehicle, you may be able to return the vehicle to us.  back