Leasing and Why I Love It So Much

Leasing and Why I Love It So Much

I think I have a conversation at least twice a week with individuals outside of work on the pros & cons of leasing vs. financing. If I were to guess, 75% of those I speak to, are huge ambassadors to financing & are skeptical to the leasing idea. Let me tell you, being in the industry teaches you a lot of things. Things to believe and things to sell (to those who need it). But when it comes to lease, I am more passionate about this concept than I am about any other concept.  Let me explain:Whenever one is considering to lease a vehicle, even if it’s my most loyal & seasoned customer,  they always seem to have similar questions or concerns.  I am confident that from manufacturer to manufacturer, certain programs adjust month to month in conduction of lease variables such as rates, residuals, incentives etc… Irrespective of the changing factors, a vehicle lease provides many advantages, but before anything, one must know be aware of the following:

1. Understanding your Driving Lifestyle & Habits

Before you even consider buying a vehicle; whether you decide to pay cash, finance or lease, you should first understand your current driving habits & how they will impact your purchase. When you lease a vehicle, contracts are based on 2 main factors; term & mileage. So, dependent upon your current driving patterns, it’s crucial for you to know & understand how you intend to use your next vehicle, how long you plan on keeping it for & your estimated mileage per year (this is very important as it correlates to your vehicle servicing costs). Because of the various term options when leasing a vehicle & the mileage associated per year could end up costing you more at the end of the lease, irrespective of your payments. Yes, payments are lower over a longer term, but perhaps, you don’t need to extend the term if the payment make sense. I’ll get to this later.

2. Resale, Resale, Resale

No matter what vehicle you choose to lease, all lease programs offer clients the opportunity to only pay depreciation for the amount of time you use the car. Remember, when you lease a vehicle, you are only paying for a portion of the car due to the residual value owing at the end of the term. meaning payments will always be less comparable to what a retail contract payment structure will look like. Now, if you take both these variables, the most attractive lease options tend to exist on vehicles that carry high resale values.  Thanks to Forbes.com, here is their take on “Cars With The Highest Resale Values”

Now, because majority of us are payment conscious, the method in to keep monthly or biweekly payments low enough to match your budget, is to effectively to choose vehicles that depreciate less quickly. Like Forbes.commentioned above, high resale vehicles will always provide clients with lower depreciation costs with the privilege & flexibility to drive the car over the term they choose. Apart from Forbes.com, here is another source that describes which vehicles meet low depreciation costs & high resale values: ALG Residual Value Awards.

3. Standard to Fine Print

With my experience at the dealership level & understanding marketing strategies from the manufacturer level, dealerships & ad associations advertise affordable, easy and amazingly low monthly lease payments, but to be honest, they are not accurate & actual. Consumers need to be educated at the dealership level on why the advertised payment will be adjusted to an actual level. Now, either you will be subjected to reading the fine print for yourself or dealership like ours will be completely transparent & let you know the breakdown on how the lease is structured. Truthfully, leasing isn’t complicated…it’s simple. All you need is a dealership or an expert to sit down & explain how it all works – in standard format. You should never be subjected to reading the fine print. However, as a consumer, do your due diligence & read details on rates, terms, residuals, down payment, taxes, accessories etc. Marketing strategies like to make leasing options sound so awesome but end up being completely different. The difference is someone actually making that awesome offer even affordable when it’s clear & concise.

4. 4 P’s – Program, Price, Payment & Payout

Let’s keep this point simple. Lease, Finance or pay cash – it doesn’t truly matter to me. It’s your money not mine. But I would be crazy not to tell you about how the 4 P’s play  a large role when you purchase a vehicle, especially when you lease. Everyone wants a deal. Everyone. That deal doesn’t have to equate to a discount. A deal can be defined by value, service, accessories, rate, payment, residual, freebies….whatever. Everyone is motivated by a deal. So, if you’re leasing, you should deserve a deal. That’s why there is no harm in discussing your needs when leasing a car. So, here is my 4 P process:

1. Program – know what incentives, programs & rebates are applicable on the car you are choosing. Understand the pro’s & con’s to whatever it presented & determine what motivates you more.

2. Price – Start at home. Turn on your PC/MAC & start researching the car you want. Know the Manufacturer Suggested Retail Price (MSRP) on the vehicle & all the non-negotiable fees, levies and taxes applicable to a lease. Maybe determine what a fair offer would be on the vehicle you are looking at. If you are comfortable with the price point, determine what your motivating factor to a deal would be: service, accessories etc.

3. Payment – Ahhh…the single most important factor when budgeting purchases. Remember, a car is the 2nd largest purchase after a home. If you got the cash sitting in the account – KEEP IT THERE! Don’t dish out excess cash to pay for a depreciating asset! That’s why leasing is single-handedly, the most affordable way of buying a vehicle. You payment will always be significantly lower than a finance & you have the opportunity to fitting that payment into your monthly expenses..

4. Payout – Everyone loves options. Why? Because we have options everywhere we turn. So why shouldn’t you have options at the end of your lease term? Remember when I said, in the beginning of this blogpost, that a lease only requires you to meet you monthly obligations until your term is due. That residual value is the option card. What are your options? Here we go:

 

So think about this more, when you lease a vehicle that has high residual values and low depreciation costs, while fulfilling the lease obligations set out by the manufacturer, you would be in a position to take advantage of the top 3 options listed above. However, if driving habits & patterns change during your lease, whether it be damage, excess kilometres etc…, then you always have the right to exercise the last option – dropping off the keys & return the car. All this is applicable on most leases, but check the agreement before you sign!

5. Build Your Lease For You

Whenever you consider all options above & that you have made the decision to lease – now you can start to customize & build your own lease. Most manufacturer & lease programs through dealers offer lease options for 12 months – 60 months with an average of 24,000km/year. With this wide range in place, you now have the option to consider what’s important for you – term, mileage or payment. Rule of thumb:

Longer the term, higher the mileage allocation, lower the payment, lower the residual.

Shorter the term, lower the mileage allocation, higher the payment, higher the residual.

Generally, we find that most who consider to lease, will end up choosing a 4 year term – which allows approximately 96,000km for the 4 years. Furthermore, dealers find that those who do lease fall under the cyclical 4 year motion, end up renewing their lease for a new model – generally allowing to stay within their monthly budget comfort zone & get the benefit of a new car, new warranty, new options, new technology & new style. Those who love their car so much, that they don’t want to part ways with it, end up re-financing the payout to keep cash at bay or simply buy the loan out. Very very very few return their vehicle to the manufacturer, unless the value of their car is worth less than the residual (as shown above). If you consider any high residual, low depreciation import, such as Honda, more end up upgrading during their lease term or at maturity vs. refinancing, buying out or return the keys.

So for you, it’s very important to explore your driving habits, vehicle wants & needs before anything. Then, when considering to lease, ensure that it matches with your lifestyle & vehicle needs assessment. Remember the 4 P’s – program, price, payment & payout – find out what suits your needs the best. So, if that’s a shorter term with a higher payment & a new option over few years – great! Maybe you want a lower payment & lower payout because you plan on keeping the car – great! No matter what option, you’re in great position!

Lastly, it’s critical to keep your options at the end of your lease at the forefront of your mind. Why? Well, those options may make sense sooner than later as life happens. Maybe a leased car doesn’t simply cut it…you need a SUV now? Maybe a van is too big for your family now that the kids have gone & a sporty coupe is a want & need…whatever it maybe, options can be exercised, typically, mid-way through your lease.

6. Lease End Termination Options

So, at Okotoks Honda, my sales staff & I provide custom & catered lease facilitation to meet the wants, needs and driving lifestyles of our VIP lease clients & their situations. On the onset of our initial meeting at month 1 of lease, we ensure we sit down during an information/consultation meeting so we can match programs, price, payment & payout options to our client’s wants & desires & subsequently, managing their portfolio until maturity. Any dealer can match & offer the similar agreements to the 4 P’s, but our lease management process includes complimentary lease evaluations, lease rental vehicle or loaner assistance during vehicle service maintenance appointments as well as discounted options for items such as tires, rims, windshields, regular wear & tear & third-party add-on’s such as remote starters, tinted windows etc.

Every single one of our lease catered programs offers our clients – YOU, with easy & simple options…& not obligations.  As we manage your lease file throughout your term, we will communicate & inform you of special lease offers, incentives, early lease end options & benefits of adjusting your lifestyle needs & wants. Here are the 5 catered & customized action plans you can choose from:

Terminate your lease by turning in the vehicle to Okotoks Honda/Honda Canada.

Trading your lease by engaging into a new lease or loan program with Honda Canada or one of our bank lenders.

Purchase your leased vehicle directly from Honda with our Okotoks Honda lease assistance.

Refinance your leased vehicle through our Financial Services.

Buyout, recondition & sell the vehicle privately for a retail price as you see fit.

Like I said, most dealers can offer the same options as we do BUT in addition to the above 5 options, all our Okotoks Honda Lease VIP clients have the ability to come see us anytime during their lease to change their vehicle needs & wants. When you lease with us, you are entitled to options & we won’t take that away from you. Apart from all the service VIP packages and offers we have, our lease clients hold a certain elite status & can consider Okotoks Honda as their lease concierge. With the assistance & support from Honda Canada, our lease clients can continue to enjoy value and savings throughout their term without any feeling of confinement, commitment & resentment associated with other lease programs offered by other dealerships.

This is why I love lease so much! Car you can love. Payments you can afford. Options you can rely on. Dealership you can trust. Process catered for you. Flexibility in purchases & lifestyle changes. Value over program, price, payment & payout. More importantly, a designed, structured & seamless purchasing option with variety & versatility to life situations.  By no means is this post to sway someone to lease or finance, all it’s intended to do is to outline lease options to those who didn’t think about it before. Options, people….options!

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Asif Premji

Asif Premji

I believe in happy ever afters, whether they’re in books or life. I believe that the world is an occasional scary place, one where we need to carve out caves of safety. I believe in the power of the human spirit. I believe it’s a sin to be bored in a world filled with information, beauty, and fascinating things around us. I believe in making a positive difference – everyday – in the lives of everyone I meet. No judgements. No ego. No expectations. Making a difference in just ONE life means that ONE life made better. God Bless.


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I first met Asif on Twitter. I had just walked away from one of the worst car shopping experiences I'd ever had (a Kia dealership) and *tweeted* it. Very soon after I received a tweet back from this "Asif Premji" guy. "Sorry to hear your car buying experience wasn't more positive - what are you looking for?" 

This was the first of many messages which has lead to not only the purchase (six months later) of a new Honda Civic Si for my wife but a professional and loyal relationship with Asif and his team. 

There is outstanding customer experience and then there is the unexpected and appreciated *Asif* level of customer experience. 

I would not hesitate to do or refer business with Asif and his team. By far one of the most enjoyable and confident car buying experiences in my lifetime. 

At Okotoks Honda I witnessed, "I actually give a $&@# about my customer", not just in words but in every day actions, long before I purchased a care and ever since. This is what I would call, Integrity in ACTION. It's not about the one off sale for them, Asif and his team truly understand the lifetime value of a single customer. 

If you're going to buy a Honda, it's well worth the trip to Okotoks and buy from anyone on Asif's team

Vince Fowler
Vince Fowler Friend & Client of Okotoks Honda

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