Real Life Lease Example
THE KEY TO SUCCESSFUL LEASING is advance preparation. Below I have reproduced an advertisement that appeared in the "Wheels" section of the Toronto Star on September 18, 1999. Let us examine exactly what the dealership is telling us: At first glance, the advertisement looks very appealing. There is a picture of the vehicle that is to be leased and the numbers that appear in bold print tell the reader that he can lease such a vehicle for $299 per month (on approved credit) for twenty four months. Not only that, the dealership has twenty-two models from which to choose. The fine print gives us additional information: (a) the dealer requires a downpayment of $4,500 cash or a trade in of an equivalent amount so you will be driving this vehicle about $11,700 over the next two years; (b) licences, taxes and registration are your responsibility.. .however it looks as if the dealer has absorbed the freight; (c) you can drive the car for 40,000 kilometres without any additional charges...but if you exceed that amount you will be charged 8 cents per kilometre; (d) without expressly saying so, the advertisement indicates that this is a closed end lease with no option to purchase at the end of the contract.. .this means that you must return the vehicle to the dealer at the end of its term. Unless you negotiate a different arrangement now, if you fall in love with the car and wish to continue to drive it two years hence, there will be nothing you can dowhen they take it back except start from scratch with another lease or purchase it as a used car; (e) note that the lease is for only two years.. .in fact, the vehicle will only be three model years old at the end of the lease, and the dealer is betting that it will hold its value throughout the period that you were driving it (with a very low amount of mileage on it).. .consequently, this car will be back in the dealers inventory in time to attract a good price in September, 2002.
A final phrase in the advertisement suggests that the dealer will be open to selling you the vehicle right now. This is suggested by their saying that financing is available for as low as 1.9% per annum. However, no mention is given of the purchase price or any other details about such an offer. The dealership is hoping that the advertisement will attract potential customers to the showroom. Once there, the customer has demonstrated some interest in the vehicle. The salesman, for his part can then explore the possibility of selling him the vehicle at that time. The customer, for his part, can feel the salesman out about negotiating certain aspects of the lease, as originally specified in the ad. Never lease a car without ensuring that you have an option to purchase it. It is possible to negotiate a closed end lease with just such an option. This will guarantee a certain selling price at the end of the contract that either you or the dealer will be able to accept or reject when that time comes. And, once you have opened the door to negotiating the buyback, try your luck at negotiating the monthly payment and the kilometre restriction. Dont expect success in all areas, but even a few concessions will put money in your pocket rather than that of the dealer.
Copyright © 2000: Allen Futerman and
Associates. All rights reserved.