|Vehicle leasing makes a comeback
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
it is 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,"
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 he or she
wants to buy or lease another
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 his or her 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.
Automakers 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,"
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
"If you are completely honest with
yourself and know beforehand what exactly you want and
need," says Litwer, "leasing will leave you very satisfied."