Luxury Car Leasing

Why lease a luxury car? What's different about luxury car leasing?
"Courtesy of the Lease Guide"

Luxury car leasing is different.

It's not so much that luxury cars are more expensive, or that the leasing process is any different, but because the consumer doing the leasing is typically different.

Luxury car consumer
High-end automotive consumers have different priorities, different values, bigger bank accounts, and prefer to transact business differently than people acquiring less expensive vehicles. They have a tendency to lease rather than buy. "High-line" vehicles are leased at the rate of 50% - 70%, depending on brand, compared to only 20% - 30% for non-luxury models.

Luxury auto consumers tend to value time, efficiency, quality of service, and business relationship when dealing with financing. Spending a great deal of time shopping and haggling for bargain deals is less important that establishing a relationship with a company they can trust and depend on to genuinely look out for their interests. They tend to be more loyal to a brand and dealership over a long period of time.

Luxury cars make good leases
Luxury automobiles make the best lease values, dollar for dollar, 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.

The best lease deals are for those vehicles, such as Lexus, Mercedes, 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 is the same or greater. This is the reason smart automotive consumers tend to lease a luxury vehicle. Being smart about money is a typical characteristic of high-end car leasers. High-line leasing consumers are not trying to save a few bucks — they have the money 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.

Independent lease companies and luxury cars
More than 20% of luxury automobile consumers finance their loans and leases outside of car dealerships, according to a recent report by JD Power and Associates.

Independent lease companies can, in most cases, beat luxury car dealers on prices and lease rates because high-end manufacturers 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." Finance companies who lease luxury cars typically require their clients to have "prime" credit ratings. This means a high FICO® 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.

For high-line vehicle leases an independent lease company can be more flexible and responsive to customers' needs than dealers, who are restrained by car manufacturers' rules. For example, when new models come out and are limited in dealers' inventories, independent lease companies can search the entire country for the exact car you want.

Benefits of leasing luxury cars
People who lease high-line cars like the convenience of a quick easy business transaction, like having a new style car every two or three years, like avoiding maintenance and repair headaches, and like avoiding disposing of used cars. In summary, luxury car leasing is different, the people who lease luxury cars are different, and the companies who lease luxury cars are different.