Why would the car dealer push you to lease than buy?

Question

I was at the Cadillac dealership yesterday looking at new cars. The dealer pushed hard to get me to lease than buy a new car. His reason: cars are depreciating commodities and there is no point investing so much money into it. I would think they would be more interested in selling cars. Any insights what is their hidden advantage in leasing cars over selling?

Answer 1

The dealer usually makes more money with a lease deal than a purchase! Therefore they push the lease! They sell the car to you or to the finance company, so there is still a "sale".

Answer 2

I worked for Ford Motor Credit for 3 years, so I know this answer. A dealer and salesperson gets paid a commission for any and all sales. A lease counts as a sale for the full list price on the unit, so the salesperson, and the dealership makes the maximum amount possible. At the end of the lease term, you have the options of walking away from the lease, leasing another unit, or purchasing the unit you currently are driving. Should you end the lease, the unit is sold at auction, the dealer does not sell this vehicle himself.
You are also responsible for insurance, maintaince, registration, and everything else, just as if you purchased the unit.
WHY LEASE? If you drive under 12-15000 miles per year, and/or trade vehicles every 2 - 3 years, then leasing may be right for you. You don't have the down payment issues, and you don't have to worry about paying off a loan on the previous vehicle you bought, unless it is paid for already.

Answer 3

Ok. Let me take care of the uneducated answer from another guy. First of all the salesman get a greater commission if he leases you the car. Wrong. It's not even close. A used car commission is ALWAYS higher than a new car. ALWAYS! If a salesman leases you a car, 999 times out of 1000, it's what we call a "mini deal"...the least possible that we can make. Usually 100-150.00 commission (used car commissions are ALWAYS higher...period!) Second you have to turn it in at the end of the lease. They always find surcharges on anything other what they think is wear and tear. Yes, the car has to be turned in or bought for the residual. BUT, any "surcharge" for the wear and tear does NOT go to the dealership. Honda Financial would receive any of that money, so that part of his answer is stupid...doesn't make sense IF you know what you are talking about, which he does not. Third any normal service has to be done by the dealership or you void the contract or warranty. Wrong again. You can change your oil anywhere you like. Untrue again. If you want to avoid paying normal servicing cost, they will sell you a package that winds up adding cost to your lease. BS. Not true. That's just stupid. If I were the salesman, there is no way in HELL I would try and lease you a car instead of selling you a used one. So....WHY are they doing that?? I have no idea. It doesn't make any financial sense. Bottom line is I would find another used Accord at another dealership if I were you. There are THOUSANDS of them out there. If you are anywhere near Northern Indiana, send me a message. I have a dozen of them and I won't try to switch you to a lease. I will make more money on a used car and it won't even be close. How would this type of lease even cover the 3 year depreciation of the car? It does. Quit over-analyzing it. If you want to lease the car, lease it. If you want a used one, buy a used one. This isn't rocket science. Buy what YOU want, NOT what the DEALERSHIP wants you to do.

Answer 4

The good and the bad sides of leasing:
1) Leasing is a good option for people who change their cars every 2 to 3 years and drive less than 12000 miles per year. This way you always in a relatively new car and the vehicle is always under warranty... no headaches to come up with hefty cash for repairs.
2) Dealer benefits since leasing guarantees that the vehicle will be returned to the dealership and they'll make profit on it again.
3) Monthly payments are lower compared to purchasing a car, hence you might be able to afford a much nicer car.
4) Vehicles depreciate greatly and after about 3 years your car is only worth 50% of its original value. Leasing means you also don't have headaches trying to sell your car.
5) If you drive too much, like to keep your car for more than 7 years or don't like to make monthly payments, then buying is a good option for you. Hope this helps....

Answer 5

They do this because they get a kick back from the bank that finances the car.Also with a lease you have to stay within a certain mileage of your car other wise its anywhere from 12 cents to 25 cents over each mile.Which adds up rather fast and since most dealer know people will surpass this mileage they make money of that as well.Another reason is because at the end of the lease you return the car pay any extras that's do and the dealer sales it at a nice high price which they will make more money on then if they had to haggle with you for a trade in price which could cut down on their profit on the sell of that car.Well hope this helps

Answer 6

the dealer likes when you lease that way you have to come back when the lease is done and either lease again or buy, so they know they got rid of a car from the lot and you will come back again to take another off the lot. If you buy you either might not come back or you might keep it for 6 years or longer. therefore leasing is them knowing you'll be back.

Answer 7

there are alot of fees associated with leasing. at the end of the lease, if you go over the mileage set then you have more fees.

the only upside to leasing is that, since it's still the dealer's car, they will make the repairs free of charge.

the bad side of a lease... you never own the car.

if you're looking to keep the car for awhile then a lease is not for you.

if you're looking to buy a new car in a few years anyway, lease and keep under all the mileage limits.

with most manufactures having longer warranties, the point of leasing seems kinda pointless

Answer 8

On a sale, they have to be up front about all the fees and you might at some point see the actual price of the car. On a lease, it's easier to hide a higher 'sale' price in the lease payments or in the lease terms, especially if the lease company belongs to the auto maker.
Bottom line, they usually make more money on a lease because buyers won't usually 'haggle' on a lease term as easily as they will on a sale price.

Answer 9

Double commission from the two lenders. If you can deduct lease payments from your taxes do a new car every 2 years. if not always buy and if possable pay cash in full show them. 7.25 percent per year over a 7 year car loan is 50% more you pay for the car. so a 50,000 cady costs 75,000 when it is paid off who is the daddy now it is the banker. Lease is even worst after paying 435.00 or more a month for three years.... Like a interest only mortgage you own zip! WATCH OUT Car sharks are in a feeding frenzy...

Answer 10

He just wants to make money from you, so when your done leasing and spending thousands of dollars, you give the car back and have nothing to show for it. Then he just leases the car to someone else...

Buy a car and tell him to mind his own business.... buy it, pay it off in 5 years then trade it in on a new car, that is how it works..... everyone knows that.