# Car Leasing.Win/Win for dealer? **URL:** \ **Category:** Factual Questions\ **Created:** [March 9, 2003, 1:33am UTC](https://boards.straightdope.com/t/car-leasing-win-win-for-dealer/160008 "2003-03-09T01:33:18Z")\ **Posts on this page:** 4\ **Page:** 2
**Author:** ![manhattan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/manhattan/32/7_2.png) [@manhattan](https://boards.straightdope.com/u/manhattan)\ **Post date:** [March 11, 2003, 12:31am UTC](https://boards.straightdope.com/t/car-leasing-win-win-for-dealer/160008/21 "2003-03-11T00:31:35Z")
Clearly, opinions differ on car leasing. Does there remain a General Question on the table or should we shoot this over to IMHO? ---
**Author:** ![ltfire](https://avatars.discourse-cdn.com/v4/letter/l/7ea924/32.png) [@ltfire](https://boards.straightdope.com/u/ltfire)\ **Post date:** [March 11, 2003, 1:11am UTC](https://boards.straightdope.com/t/car-leasing-win-win-for-dealer/160008/22 "2003-03-11T01:11:44Z")
You be 'da boss, boss. ---
**Author:** ![Max\_Harvey](https://avatars.discourse-cdn.com/v4/letter/m/ac8455/32.png) [@Max\_Harvey](https://boards.straightdope.com/u/Max_Harvey)\ **Post date:** [March 11, 2003, 3:48am UTC](https://boards.straightdope.com/t/car-leasing-win-win-for-dealer/160008/23 "2003-03-11T03:48:52Z")
> [@](#): > > \*Originally posted by badmana \* > **Mortgages, leases, finances and cell phone/regular payments don’t give you good credit, only prevent you from getting bad credit.** I don’t think they drive the bureau ratings up, if that’s what you mean, but we don’t swear by those anyway. If you’ve got a sufficiently long credit history with few “check in the mail’s”, that’s going to impress us more than a computer formula. (That formula may calculate such things, but we don’t just look at the scores and toss them if they’re borderline. Obviously we’re not going to lease an LX470 to someone with a Beacon in the 500s 🙂 But a high score isn’t automatically going to get you there, either. Good credit rating != sound auto-lease investment.) As for excess number of “micro-late” payments, from my experience we take little stock in them, although I don’t know how much they drag down the bureau ratings. > [@](#): > > _Originally posted by Jonathan Woodall_ > **is it any better or worse than, for example, financing your car for say 3 years, and making diligent payments?** Outside of our in-house financing to customers at end-of-lease (which has about a 90% approval rate) I don’t have any experience with auto loans. I would think the major difference is equity. In that case leasing could be a liability since I would think non-auto financing companies would assume your assets would shrink or remain the same at the end of lease, rather than increasing by your monthly payment amount after the loan is paid off (and before you finance another car) and giving you potential collateral. Regarding **metroshane’s** assertion that leasing companies make more money when the lessee gives up the car, this is very seldom the case with us. The ~$400 in fees I mentioned earlier is hardly pure profit. We have no markup on repair costs, excess mileage has an enormous impact on resale value, and most of the term fee is eaten up by administrative costs. When the lessee buys the car, the price is generally 10-15% higher than what we get from third-party dealers or auctions: we don’t have to worry about remarketing, transportation and auction fees, and if they turn around and finance the car from us, cha-_ching!_ (Our lessees don’t get to buy the car at bare residual value unless their state’s laws force us to let them. Other states lock us into a fixed markup.) I would say leasing is a win-win for the leasing company about 80% of the time, but unless we get your post-lease loan payments for another 3-5 years, there has to be significant volume to make up for the expenses. The industry has been moving steeply downward since 2000, with poor word-of-mouth and zero-interest financing being bigger factors than the economy. So it’s possible leasing may not even be an option in 5-10 years. ---
**Author:** ![Balthisar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/balthisar/32/2825_2.png) [@Balthisar](https://boards.straightdope.com/u/Balthisar)\ **Post date:** [March 11, 2003, 12:48pm UTC](https://boards.straightdope.com/t/car-leasing-win-win-for-dealer/160008/24 "2003-03-11T12:48:25Z")
I guess I should further point out that my last two leases – one GMAC and one Ford Credit – and neither had any type of lease turn in fees. As per credit reporting, my Equifax showed GMAC financing the lease-value of the vehicle, and showed Ford financing the entire value of the vehicle. It was strange seeing a Bonneville and a Ranger being “financed” for close to the same amount! And maybe Michigan is one of these states that force the buyer the option to purchase at the residual value? Both contracts had guaranteed purchase price rights that were identical to the residual value. Really, win-win. If the cars had been worth more than the residual, you could buy them outright. Worth less? Get rid of them. I’ll further point out that both companies were extremely liberal in their fair-wear-and-tear. The Ranger bed looked like a well-used pickup truck bed, with paint chips missing, scratches, my cool white Apple sticker, and so on. The windscreen wasn’t the orginal. Got back my full security deposit back. The Bonny had dings and scratches, all less than 2" in size, and my gay-looking Apple sticker, and didn’t owe anything (there was no security deposit to get back because there was no security deposit). [Previous page](https://boards.straightdope.com/t/car-leasing-win-win-for-dealer/160008.md?page=1)