Leasing 101: For Auto Salespeople

So you have been selling cars for a while and want to “Up your game”? Looking at your sales activity, what percentage is comprised by leases? If it is less than 25% is it because you do typically do not include it as a viable option for your customers? If this is the case, isn’t it time to reconsider your approach to further insure long-term success for your career?
You obviously rely on repeat customers as well as referrals. The truth, however, is that regardless of your amount of professionalism and diligence, you have no absolute guarantee that your customers will return to purchase their next vehicle from you. Buyers could decide to hold on to their vehicles longer than their original intention or trade for another make. You have a better chance of repeat business if a greater percentage of your customer portfolio was leased. When you lease a customer a vehicle there is a finite term attached to the transaction. True, the customer could still go elsewhere and that dealer could take the vehicle in trade paying off the lease. However, it is a proven fact that customers who lease their vehicles feel more connected and more loyal to their original dealership.
So, how much do you really know about leasing? Hopefully, the following will assist you Car Sales Direct in your presentation which in turn leads to an enhanced amount of business for you.
The basic principle of leasing is that the customer pays for the amount of the vehicle they use as opposed to paying for it up front and hoping to get a reasonable amount in trade during the next buying transaction. This alone is a huge advantage to leasing as there are many unknowns to the amount of depreciation any one vehicle will incur. What if it sustains major damage and repair? Granted, insurance will handle this event, but diminution in the cars value becomes the owner’s liability. In the case of a lease, the owner Used Trucks For Sale Facebook is the leasing entity, therefore it is their problem. The vehicles depreciation will end up being much greater than the forecasted residual. What if the vehicle is stolen or totaled? The owner will be faced with negotiation with the insurance company for a replacement value, many times this could be less than a finance payoff leaving the owner with a substantial shortfall. Conversely, most leases today include gap insurance which terminates the lease in the event of a total loss with no further liability to the lessee.
Lease payments are typically less than finance payments inasmuch as both interest and depreciation are mitigated by the length of the lease. Furthermore, the amount required up front is normally much less than financing. In turn, most people who lease will end up with more car for their money.
Opponents of leasing usually point out that there is no build-up of equity. As a salesperson, when is the last time you traded someone out of their vehicle into a new one and they pocketed that equity? They didn’t. Instead, if in fact there was any equity, they used it as a down payment for the next vehicle. For customers who have purchased and financed their purchases again and again, ask them to trace the equity from their first purchase up until now. Once again, it will prove that this equitable dollar amount never ends up in their pocket
There are two basic types of leases, Closed-End and Open-End. Do you know the difference? Explaining the differences to the customer gives you a “Leg-up” on the competition, even though 99% of all dealership leases are closed end. Most customers take it for granted that they can just turn the vehicle in at the end of the lease. A closed end lease simply means that the customer has no contingent liabilities towards the resale value, or, i.e., that the vehicle will be worth the forecasted residual. Their only liability is damage and over mileage charges. Conversely, an open end lease means that the customer guarantees the residual value, whether they buy it, they sell it or a third party takes the vehicle in trade for that amount. Most corporate fleet leases are structured on an open end lease.
Leasing has a multitude of advantages for the customer and the dealership alike. It is to your benefit to become more knowledgeable about leasing. This article only touches the surface but hopefully ignites a fire of curiosity and motivation for salespeople to use leasing as a great closing tool in their daily quest for sales.

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