Luxury Car Leasing Explained

Why lease a luxury car?

How is luxury car leasing different?

luxury car leaseHow is it different? It’s not that luxury cars are simply more expensive, or that the leasing process is different, but it’s different because the people doing the leasing are different from the average automotive  consumer.

Many high-end automotive consumers have different priorities, different values, bigger bank accounts, different philosophies about money,  and prefer to transact business differently than less affluent people.

As a result, they have a tendency to lease rather than buy their cars. “High-line” brands such as Mercedes, Porsche, Audi, Lexus, Acura, Jaguar, BMW, and Land Rover are leased at the rate of  about 70%-75%, depending on brand, compared to only about 25%-30% for non-luxury models, and even less for the least expensive models.

Luxury auto drivers tend to value time, efficiency, quality of service, and business relationships above simple economy. Spending a great deal of time shopping and haggling for bargain deals is less important than establishing a relationship with a company they can trust and depend on to genuinely look out for their interests.

High-end customers tend to be more loyal to a brand and a dealership over a long period of time.

Luxury cars make good leases

Luxury automobiles make the best lease values, dollar for dollar, than other brands — due to high lease-end residual values relative to MSRP. In fact, luxury vehicles, as a category, are leased significantly more often than vehicles in any other category — by the people who best know and understand the value of money.

The best lease deals are for those vehicle brands, such as Lexus, Mercedes, Porsche, Land Rover, and BMW, with the highest future resale values, or residual values, relative to their original cost. A high residual value creates a low monthly lease payment.

In fact, a better lease deal can often be obtained by leasing a high-residual luxury car than by leasing a car with a lower residual value, even though the price of the luxury car may be greater. This is the reason smart automotive consumers like to lease luxury brand vehicles.

Being money-wise is a typical characteristic of high-end car leasers. They are not trying to save a few bucks — they have the cash to buy the car they want. They simply know that it’s not smart to put money into depreciating assets (automobiles) when that money could be used for more productive purposes.

Getting deals on luxury car leases

High-end car companies typically don’t subsidize deals and offer incentives nearly to the extent that low-mid-range vehicle manufacturers do. Furthermore, luxury car dealers don’t like to be viewed as “discounters.” You’ll rarely see large rebates being offered.

However, these companies often provide subtle indirect incentives that won’t be viewed as wholesale discounting. In particular they offer special lease deals with low payments that are based on discounted prices, low money factor, and high residuals — although it’s not obvious what they’ve done to create the deals. They may also offer hidden “factory-to-dealer” rebates that dealers can use to reduce prices on an individual customer basis.

These special lease incentives are only available if you lease through the dealer’s captive finance company (the finance company owned by the car manufacturer). However, there are also independent finance companies that dealer’s sometimes work with who might be able to offer better deals when special incentives are not available from the manufacturer.

Finance companies who lease luxury cars typically require their clients to have “prime” credit ratings. This means a high credit score of 700 or greater. Lower credit scores can mean higher lease rates, large down payments, and security deposits — and possibly higher insurance rates. If you don’t know your credit score, you should. What’s your FICO score? Find out now when you check your credit report for $1 at Experian.com!

Benefits of leasing luxury cars

People who lease high-line cars like the convenience of a quick easy business transaction, enjoy having a new car every two or three years, like having no maintenance and repair headaches, and like avoiding disposing of used cars. They also like the option of minimizing cash outlay.

Least expensive way to lease luxury cars

The single best way to drive a late model luxury car at the lowest possible cost is to take over an existing car lease from someone who wants out of their lease.

Why is this a good way to lease?

Many existing car leases were taken out months ago when car manufacturers were offering incredible money-losing deals and low monthly payments. Some of the people who took those great lease deals now need to get out after losing jobs or suffering other financial distress. Most lease companies allow the leases to be transferred to someone else by simply paying a transfer fee.

Since the original lessee got a good deal anyone taking over the lease will inherit the same great deal, same low monthly payment, with NO MONEY DOWN, no up-front sales tax, and in many cases, a CASH incentive from the “seller.” There is no other way to get a late model luxury car this cheap with payments this low.

How to take over an existing luxury car lease?

Online companies such as Swapalease act as match-makers between people who want out of a lease, and people who want to take over a lease.

Swapalease is the largest online lease marketplace and have the largest inventory of lease takeover vehicles. Look over the vehicle listings and if you find a car you like, they help arrange the lease transfer with the lease company. It’s easy and fast.

Summary

In summary, leasing a luxury car can be a good deal — due to high residual values — for anyone who wants to preserve cash for more productive purposes — or simply wants to drive more car than they might otherwise be able to afford.

 

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