We started leasing vehicle out of our Jerome location about four years ago.
We partner up with our local bank -- Farmer's National Bank. They allow us to buy a little nicer, higher dollar car than we normally do.
So if someone qualifies for our lease program -- which requires a $1,500 down payment -- we do a 30 to 36 month lease on that nicer, newer car through the bank.
In this case, customers make their payments to the bank. This will also help customers raise their credit scores by the credit reporting with the national bank.
What we do is take 30% of the loan. There is a 30% residual, so customers are only making payments on 70% of it. This helps people buy a nicer car and keep their payment lower.
And then at the end, when the residuals go to the bank, people can either refinance the car through Country Auto for just the 30% to keep a low payment and keep the car, or they can turn in the car back to us as a lease, or they are able to re-lease a newer one, or they can buy another one with our in-house financing -- whatever they’d like to do.
Is it better to purchase or lease a vehicle?
Purchasing or leasing a vehicle depends on the individual’s situation. For the most part, I'd say leasing has a lot of advantage for our customers. One reason is that they can buy that nicer car and keep the payment lower. We can lease it for 30 months or 36 months, but we do some 24-month leases. So we can do a two year lease or a 30-month, or a three year lease.
Some people like a new car every two years or three years because models change really fast. The lease is a really good option for those kinds of customers. But if you're one of those people who like to keep the car forever, buying one outright is probably better for you.
One of the misconceptions that people think about leasing a car is that they don't own the car. But if you buy one with a lienholder – like a bank or with a buy-here pay-here dealership -- you technically don't really own it either. If you don't pay, the bank’s gonna take it back, right? So it's kind of the same thing.
With our program, at the end of the lease, our customers have that option to buy it for the residual amount. So if they love the car and want to keep it, they can purchase it at the end and they’ll own it anyway.
Most feedback we get from our customers is that they want to own the car. So if they want to, they’re going to own it at the end. During the lease, they don't own it, but they technically don't anyway if they have a lien holder.
A huge advantage of leasing a vehicle is that if you do a two-year lease, you make your payments and you're done at the end. You walk away. However, if you purchased the car in the beginning rather than lease -- especially a more expensive car -- in two years, you're upside down on what you owe and what it’s worth. You probably don't have enough equity paid in order to walk away if you bought it. It’s actually a better option to lease if you'd like to change cars all the time.