Fox Auto Consultants

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UNDERSTAND LEASING

Understanding Vehicle Leasing AND Vehicle Purchasing

When you understand how car leasing works, it allows you to determine the best route to obtaining your new car. Based on our expertise, we help you decide if it’s better for you to lease or purchase. It’s important to remember that car leasing is NOT the same thing as a car rental. They are two different business concepts. (And FYI… We are not in the car rental business!) Vehicle leasing is based on the fact that you pay for the amount that a vehicle DEPRECIATES during the time you are driving it. Depreciation is the difference between the vehicle’s original value and its value at the end of the lease (also known as residual value). It’s the primary factor that determines the cost of leasing. That means, the smaller the difference, the lower the lease payment and the better the deal. Let’s take two different brands of cars where both of them cost about $20,000.00 right off the lot. One is worth $15,000.00 after two years, but the other one is worth on $12,000.00. The first car is going to cost less to lease because it has a smaller depreciation amount. That also means that vehicles with a lower depreciation should be the better lease deal.

Request A Vehicle

We’ve worked with a lot of leases over the years, so we can walk you through the process. We can let you know if a lease will work for you or if it would be a better deal for you to purchase the vehicle. When we get together, we can further explain MSRP (Manufacturer’s Suggested Retail Price) and how that (and other terms) affects your lease (or purchase). Here are some points you may want to think about…

Vehicle Leasing

Pros

Lower Monthly Payments: Lease payments are computed on the actual amount of use. You don’t buy the whole vehicle’s lifetime in a single lease transaction.
No Down Payment: Leasing a vehicle usually requires the first month lease payment, a security deposit and the license fee.
Drive a Better Car: Because of no down payment and lower monthly payments, you can drive a much better vehicle than if you purchased it outright which means you conserve your cash.
Simpler accounting when using as a business deduction. (Check with your CPA)

Cons

Low Equity
Possible Use Surcharge
Early Termination May Become a Problem
Potentially More Documentation Required

Vehicle Purchasing

Pros

Depreciation Write-Offs: Subject to current tax laws at time of purchase; depreciation of vehicle is available
Builds Equity: Purchasing your vehicle places a portion of each dollar into equity in your investment. At the end of the purchase contract (if you financed your vehicle), you will have “equity” built. This equity may be recouped when you sell or trade.
Sell At Any Time: Subject to interest payments, you can sell the vehicle at any time and realize your NET position immediately.
Pride of Ownership: If you’re a “car person”, owning a car is the only way to go. Your care and attention give you something of which to be proud!
Excessive Driving: If you drive a lot (more than 25,000 miles per year), purchasing the vehicle may be the smartest way for you to go. Leases may penalize you for exceptional mileage.

Cons

Down-Payment Usually Required
Inflation Equity Loss of Value
Substantial Recordkeeping Required for Tax Deductions.
You Don’t Really Own it Until Paid Off.
With Excessive Miles The Value is Greatly Diminished.
Purchasing (or leasing) a vehicle is in the Top Ten of one of the largest purchases you’ll make in your lifetime. Understanding the “lingo”, terms and conditions, as well as the ins and outs of buying or leasing is important. That’s why we’re here for you. Before you call us, why not do a little homework for your own peace of mind? You can go online to the manufacturer’s website and view all the different options and features of the vehicle you’d like to have. Check our what is standard equipment and also what is optional equipment so you have and idea of what you’d like in your car. But, PLEASE do NOT submit your information to the dealers! In almost all cases, they will contact you repeatedly which can be very annoying! See what you want and then let us do the rest for you! When you contact us, we’ll talk about your likes and dislikes – the amount of driving you do around town or even long-distance. It helps when we know how the vehicle will be used, too. Will it be a family car? Business? Recreational? Are you looking for something smaller? Larger? Sportier? Dou you have a trade-in? Do you have or need a down-payment?  You being happy is what it’s all about for us. We enjoy this industry and want your experience to be stress-free and unforgettable.