Leasing Frequently Asked Questions

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Q? How is leasing different from financing?
When you finance a vehicle, you are getting a loan from a bank to pay for the vehicle. It's fairly simple mathematical equation. To keep monthly payments low, folks usually get a five or six year loan and live with negative equity for the first few years.

When you lease a vehicle, your monthly payment is determined by vehicle deprecation and lease charges. You are only paying for the part of the car you use. This translates to lower payments, no negative equity, and many other advantages covered here.

Q? How is leasing different from renting?
Most people don't know the difference between leasing a car and renting one. Leasing and renting are very different, but you can't blame it on the general public for this confusion. For example, when you rent an apartment, you sign a lease. But when it comes to vehicles, a leased vehicle is considerably cheaper than renting a like vehicle. For example, a rental car that costs $75/day would cost you over $2000 per month!

Q? What if I drive too many miles?
This is a common concern and you'll be happy to know that there is little to worry about. A typical lease allows for 15,000 miles per year (41 miles per day, every day of the year-more than most people drive), but many banks offer additional mileage options. If you exceed the mileage you sign up for, you are charged 15 cents per mile at the end of the lease. However, when you trade in a vehicle that you financed (or paid cash for) you will be penalized 25-35 cents per mile over 15,000 per year when the value is calculated. So 15 cents, in fact, is a better deal when you drive a lot of miles.

Q? What if I want to break the lease early?
Like a loan, this is very flexible. The payoff is the difference between the initial value and the depreciation that has not yet been covered by the lease payments.

Q? Will I qualify for a lease?
For the most part, anyone who qualifies for financing will also qualify for a two or three year lease. In some cases, someone with a lower credit score will qualify for a lower rate than they would with financing.

Q? What if I want to own or have equity my vehicle?
When you finance, you don't actually own anything-the bank owns your vehicle until you pay it off. Since 83% of financed vehicles are traded in before the balance is paid to zero, these customers NEVER own their vehicle. If you don't plan on ever owning your vehicle, then leasing is a great option-and you'll never have to worry about negative equity.

Leasing is designed NOT to give you equity in a vehicle. You pay only for the part of the car you use instead of for the whole car, and that saves you cash. Compare a three-year lease with a three-year finance contract. The lease payment will be 40 to 50 percent lower, which means that leasing can save you $200 to $300 per month in payments. True, you won't have equity in the vehicle, but you will have potentially huge cash savings. And most people can use cash-in-hand to cover other expenses, right?

Q? Why don't more people lease?
Most stores don't present it to consumers as an option. This is usually because they aren't educated enough on the subject to explain it themselves. So consequently the general public isn't educated on it-we tend to avoid what we don't understand.

Q? Will my insurance premiums go up with a lease?
That depends on your current coverage. Banks usually require minimum liability coverage of $100,000/$300,000/$50,000 because they own the vehicle. As the owner, the company is primarily responsible for any damage the vehicle does. You might consider any increased premium as going toward increased value in leasing-you will have better coverage in case of an accident.

Q? When shouldn't I lease?
First, if you're planning on relocating to another country and want to bring your vehicle with you, you'll need to show proof of ownership to ship a vehicle. You don't own a leased vehicle, so you would have to terminate the lease early, buy the vehicle, and possibly finance it. It would be a bigger hassle than it's worth.

Second, leasing is not for anyone with a poor driving record. The cost of the mandatory public liability insurance would be likely to outweigh the benefits and savings of leasing.

Finally, anyone with unlimited cash and no particular economic use for it might not benefit from leasing. In these cases, it's usually easier to write a check for the whole vehicle and have it over with. That said, a lot of wealthy people lease their vehicles because they see value in doing so.

Q? What's in it for Titus-Will? Is there a catch?
Since 93% of our leasing customers return for another lease, that means they must be pretty happy, right? Happy customers refer their friends and family and that's good for business.

Leasing is just an option with many advantages. If you like it, great. If not, we're happy to help you finance your vehicle.