When you are thinking of leasing a new vehicle it is always a good idea to go with the original manufacture’s dealership, the reason behind this is simple, the dealers will have the ability to purchase the vehicle at invoice prices from the manufacture where private leasing companies and automotive brokers can’t. Let’s use Honda for example, if you are planning to lease a brand new Honda Civic and your monthly payment is set to be $ 300 from the dealership, don’t be fooled into thinking $ 290 from an automotive broker or private leasing company is a better deal. Unknown to the public private leasing companies will have different contracts and legal obligations you maybe held responsible for. For example even though your monthly payment is $ 10 cheaper per month, do you know if you have an open or closed lease? Do you know if you must purchase the vehicle at the end of the term for a fixed amount? Are you forced to pay an outrageous administration fee or termination fee? Are you aware you are not allowed to break the contract early without a huge penalty? There are many scenarios and options you should consider before making your final decision.
The reason some leasing companies and automotive brokers are able to offer you a cheaper monthly payment are simple. By purchasing the vehicle cash from the manufacture, the private leasing company can now set their own rules on your lease contract. They can adjust the buyback value on the vehicle, in our previous Honda example if your Civics’ residual or “buyback” value was suppose to be $ 9000, the leasing company will simply adjust that to $ 10,000. The higher the residual value is the cheaper the monthly payments will be, however you need to find out if you are forced to buy the vehicle at the end of the lease for that amount. Leasing companies will often charge you outrageous amount of administration fee if you are terminating the lease with them, you should really read and understand all the fine prints on the contract you are signing before making the decision. The reason a leasing company or automotive broker will always be more expensive is simple, they have to purchase the vehicle from a selling dealership. They are the middle man of middle men, since everyone has to make a living, a dealership is selling the vehicle to the leasing company for a profit, which you in directly are paying as well.
The pros with a private leasing or automotive broker services are obvious, for one you don’t have to step into a dealership’s door at all, saving you tons of time and effort. If you are looking for a specific payment per month and don’t mind the high buyback, they maybe your only option left. Piece of advice you shouldn’t deal with any automotive broker or leasing company if they tell you to “test drive the vehicle at the dealership, and come back if you like the car”, a reputable company usually will have some kind of inside connection where a dedicated individual is dealing with broker customers. If the broker simply asks you to go in to test drive a car without a chance of you buying the car from the dealership, you should question their business practice and ethics when dealing with you as a customer.
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