you can't afford to buy my car!
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YOU CANTAFFORDTO BUYMY CAR!BRUCE MOUNCEY OF ROLLING HILLS AUTO PLAZA
MY MISSION IS TO HELP YOU MAKE SMART CHOICES
I HELP THE BEST PEOPLE, TO DRIVE THE BEST CARS, THE BEST WAY POSSIBLE.
The BEST PEOPLE is YOU, the educated customer.
The BEST CARS are the 3 best brands available, TOYOTA, HONDA, AND NISSAN.
The BEST WAY POSSIBLE is through LEASING.
Today I want to talk about the last part, leasing. If I cant convince you why leasing is the best way to drive a car, in ONE slide, you dont need to read any further.
FIRST, AN IMPORTANT CONCEPT: DEPRECIATION
Let me take an analogy from home ownership to explain a concept:
One of the benefits of buying a home is that you have the ability to capture the appreciation, if the value of the home goes up.
But in times when the homes values are falling, does anybody want to capture the DEPRECIATION?
So, if vehicles typically depreciate, why would anyone that is smart enough to lease a depreciating house, choose NOT to lease a depreciating car?
Can I share a little more information with you now?
TYPICAL BUYERS PHILOSOPHY
Leasing is complicated/waste of money/somehow illegitimate
(Really) I want to own because I understand ownership:
Pay the negotiated price
Drive the vehicle for a while
(The vehicle depreciates in value)
Trade the vehicle in for some amount
Do it again
Life is rarely this simple, and the simple solution is rarely the least expensive
(SOME) DRAWBACKS OF OWNERSHIP
You assume all the risks that come with ownership:
You are committed to pay the whole price of the vehicle no matter what
If you pay cash, your cash is tied up in the vehicle (CASH FLOW)
Borrowers pay interest on the whole price of the vehicle (CASH FLOW)
Sales tax is due up front (CASH FLOW)
You do not know what the trade value will be (THE BIG GAMBLE)
If you have a loan, the equity may not pay off the loan (NEGATIVE EQUITY)
Accidents reduce the trade value, even if insurance fixes it (DIMINISHED VALUE)
Insurance may not pay the whole loan off if the vehicle is totaled (THE GAP)
VEHICLE DEPRECIATION: DO YOU WANT ALL OF IT, OR ONLY PART OF IT?
You cant totally escape paying for depreciation with a vehicle, but you CAN make a smart decision about HOW MUCH of it you are willing to pay for.
Lets use a different term for purchasing. Lets call it, Pre-paying for 100% of the depreciation.
Likewise, leasing, is the same thing as, Paying for PART of the depreciation.
When you purchase, it is as if you plan on keeping the vehicle forever, so you must pre-pay for 100% of the depreciation up front. Then, if you sell it later, you will recapture whatever depreciation is left unused.
When you lease, you only pay for that part of the vehicle you are going to use up.
HOW AUTOMOBILE LEASING WORKS
Instead of paying for the whole purchase price, you pay only for the portion you use. This is called the capitalized cost. You also agree to drive the car for a certain time.
You only pay interest on the capitalized cost. (This is a big deal!)
You only pay sales tax on the lease payment each month, not on the entire purchase price, and not up front.
The guaranteed repurchase value at the end of the lease is fixed by the factory. This is called the residual. The vehicle will never be worth less than the residual.
You have three options at the end of the lease: Turn it in if there is no equity, or either trade it in or buy it outright if there is equity in the vehicle.
SINGLE-PAY LEASE VS. CASH PURCHASE
$25,000 purchase price
$25,000 cash outlay for purchase
$12,987 cash outlay for lease
Sales Tax: $2,112 up front for purchase; $1157 up front for lease
Lease residual= $12,500
Cash tied up for 3 years: $27,112 for purchase; $14,144 for lease
Cash that stays in YOUR bank account with a lease: $12,968
P U RCHASI N G L EASI N G
TOTAL CASH OUTLAYSales Tax Cash outlay Savings
LEASE VS. PURCHASE CASH FLOW WITH FINANCING
Example: $25000 purchase price
60-month loan, 36 month lease, both traded in at 36 months
$0 down for both; 2.5% interest
Sales Tax: $2112 up front for purchase, $32.13 per payment for lease, or $1157 (8.45% locally)
Payments: $443.68 for purchase, $360.77 for lease
Total cash outlay: $18,084 over 36 months for purchase, $14,144 for lease
Net lease cash savings: $3940
Down Payment Taxes 36 Payments Cash Difference
Cash Flow of Purchase vs. Lease
BREAKING NEWS: LEASES GO ON SALE!
Actual sale offers taken from Honda website on 5/26/16, 2016 Accord LX
$23,840 purchase price, 60-month loan, 1.9% interest
36-month lease, 0 down
Sales Tax: $2014 up front for purchase; $20.28 per payment for lease, or $730 (8.45% locally)
Payments: $416.82 for purchase; $240.00 for lease (!)
Lease residual= $13,588
Equity on purchase= $???
Total cash outlay: $17,019 over 36 months for purchase; $9,130 for lease
Net lease cash savings: $7889
Down Payment Taxes 36 Payments Cash Difference
Cash flow of Purchase vs. Lease on sale
THE BEST WAY: LEASING
LEASING IS ALL ABOUT AVOIDING RISK. SMART PEOPLE AVOID RISK.
NO GAMBLE AT TRADE-IN TIME
ONLY PAY FOR WHAT YOU USE
ONLY PAY INTEREST ON WHAT YOU USE
ONLY PAY SALES TAX ON WHAT YOU USE
LEASES OFTEN GO ON SALE, SAVING YOU EVEN MORE!
TRADE IN ANY TIME, JUST LIKE A PURCHASE
TAX DEDUCTIBILITY FOR BUSINESSES 100% OF PAYMENTS ARE DEDUCTIBLE
EASIER FINANICAL PLANNING
THE BEST CARS: TOYOTA, HONDA, AND NISSAN
Leasing works best if you lease the RIGHT vehicle.
Rolling Hills Auto Plaza is one of only a handful of places in the country where you can shop for the three top import brands in one place.
The Toyotas, Hondas, and Nissans at Rolling Hills Auto Plaza have some of the best lease residuals on the market. The result: Lower payments than competitors, for higher-quality vehicles(according to Kelly Blue Book, Forbes, Consumer Reports, etc.).
Now, one last surprise: You can lease Certified Pre-Owned vehicles, too!
THE BEST PEOPLE LEASE TOYOTAS, HONDAS, AND NISSANS FROM ME, BRUCE MOUNCEY, AT ROLLING HILLS AUTO PLAZA
IF YOU WOULD LIKE TO SAVE $50-250 PER MONTH ON YOUR CAR, CONTACT ME AT (816)671-4546, TO ARRANGE A TIME WHEN WE CAN VISIT, TO SEE IF I CAN POSSIBLY HELP YOU WITH YOUR NEXT VEHICLE LEASE. OR EMAIL ME AT [email protected]