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Hinnant says that
Navy Federal offers leases that start at 24 months and
go up to 60 months. Navy Federal can also offer sales
tax exemptions in states that apply because they are
a government agency.
Mileage standards on leases can also be
adjusted, but at a price. The normal 15,000 miles-per-year
can be pushed up if you think you will go over the limit.
The mileage standards range from 10,000 to 20,000 miles
per year depending on the manufacturer's leasing options.
However, it's a better bet to lease a vehicle with low
mileage terms because the higher the miles, the higher
the monthly payment.
While mileage options and leasing terms
might appeal to the consumer, the main issue remains
the monthly payment.
The lease's allure
"For most consumers, low monthly
payments are the incentive that gets them into a lease,"
says Hinnant.
Some credit unions, such as Navy Federal,
offer potential customers no penalties for early termination
and no sales tax on the lease in states that apply.
However, some manufacturers are also offering lease
programs that allow a customer to get out of a lease
if they want to buy or lease another vehicle.
In 2005, General Motors offered its
leasing customers the chance to return a car if they
were not satisfied. The "Freedom Program"
was offered to consumers in six states allowing them
to return one of three models before they had driven
12,000 miles. A lessee would lose only their down payment.
Litwer says, "Consumers don't want
to be used-car salesmen; therefore they consider the
economics of leasing a car and the ability to return
the car and get a new car at the end of the term."
Litwer expects the high-end vehicle leasing
market will go up 50 percent or more by 2007.
Both automakers and consumers have grown
smarter in the leasing game. Auto makers who once flooded
the market with lease deals that left them with a deluge
of low-mileage, off-lease vehicles in the late 1990s
are now better prepared to market off-lease vehicles
through their certified used vehicle programs.
"The trend seems to be that captive
leasers stick with shorter terms. They try to discourage
leases past 36 months because they want to certify the
car and it's much easier to certify a newer car than
an older car," says Shebesta.
Consumers will gravitate toward the best
deals whether the deal comes from a captive lessor,
a credit union or an independent.
"People know what they want, how
much they can afford and how long they want the car,"
says Lewig.
Learning the lease language
The No. 1 rule in leasing is for
consumers to know exactly what they need in terms of
monthly payment, length of lease and mileage. Automakers and financers want repeat customers
and leasing offers them a better chance at bringing
them back.
"If you are completely honest with
yourself and know beforehand what exactly you want and
need," says Litwer, "leasing will leave you very satisfied."
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