5-year lease deals can be lucrative for car dealers, but they’re a gamble August 10, 2021 August 10, 2021 admin

A 5- or 6-year car leasing contract can be a real life game changer, especially if the customer is a big-name car dealer.

But that’s not always the case.

And, for some, the 5- to 6-month leasing contracts they sign with car manufacturers are just a way to make extra money for themselves.

Read moreRead More”It’s like a lot of these guys have been doing it for a long time and are still getting the bang for their buck,” says Josh Stoll, vice president of leasing and car sales at JDM Inc., a car dealership based in San Diego, California.

“If you’re an OEM, there’s a good chance you’re going to get a 5-month lease.”

It’s a simple equation, though, says Josh.

He tells prospective customers that the dealership will “offer a lease for the first three months of the contract and then after that, you’ll be stuck with a car until it expires.”

The dealership’s leasing model is a popular option for some big-ticket customers, including luxury brands such as Porsche and Ferrari.

In addition to a 5 to 6 month lease, dealers can get a discount on the purchase price for car buyers.

That way, the dealership can recoup the difference in price when the car is sold.

“The key to a good deal is that you’re looking at a deal that has a low deposit that’s low and a long term lease that’s a lot higher than what the customer would pay on a standard lease,” says Stoll.

For the most part, leasing a car for just five months is not a big deal.

“For a lot, the customer isn’t going to want to commit a significant amount of money to leasing,” says Dan Tovar, a business manager at AutoTrader.

“It’s kind of a one-time deal.

But there’s no reason not to look at the opportunity of a few months to get in and take advantage of the deal.”

While some car dealerships offer extended lease terms, most are just offering the most basic options.

If the car you’re leasing is going to be used for a significant period of time, you may want to consider something that includes more options.

“I don’t know how many people will ever be able to afford a car that’s going to last a full year, let alone a couple of years,” says Tovarc.

“A car that lasts a year might be worth more than a car you just bought.”

If you have a specific car in mind, consider a model that’s on the rise, says Stull.

For example, some companies such as Lexus are offering luxury cars in limited production, such as the X-TREME, and then offering a limited-time lease on that model.

For others, such a model might be more suited to a larger fleet, such an SUV or crossover.

“When you think about it, if the X is going away, you’re not going to need a car like that anymore,” says Daniel Ries, senior automotive analyst for Kelley Blue Book.

“The X-Type is a great model, but that’s just not the car that the market is buying.”

The bottom line is, leasing isn’t the only way to take advantage.

If you’re willing to do the work, you can reap the benefits of the deals that car dealers can offer.

“You can get more money from leasing if you’re just buying an old vehicle or you’re buying a used vehicle,” says Ries.