Overcoming Objections to Leasing

Presented by www.wyemanagement.com

“You don’t own anything! It’s like renting!” I understand how you feel Mr. Jackson however, if you were to purchase the vehicle under a finance agreement and missed a few payments, the true owners of the vehicle (the finance company) will send a tow truck around to collect it. Just as with your home that has a mortgage, you enjoy habitation privileges but if you were to skip a few payments, the true owners (the bank) will issue a foreclosure on your property. It’s really not until we finish paying our obligations that we get to enjoy true ownership privileges. With a lease, you in fact own 3 great options that you don’t get if you were to purchase finance the vehicle: 1—Keep it – you’ve test driven the vehicle for a few years and are happy to keep it and exercise your option to buy and simply complete the purchase and pay the residual value. 2—Drop it off – your vehicle is not worth the residual value in which case you’ve saved from realizing a loss due to market depreciation (a residual value of i.e. $9,000 and a market value of $7,500 means that you won’t take a $1,500 loss) or avoid the loss incurred from a repaired vehicle that was in an accident – you have to declare the damage and the amount of the repair which dramatically reduces its market value. 3—Trade/Sell it – your vehicle may have some equity that you can realize if you sell it to us or possibly sell it privately (a residual value of i.e. $9,000 and a market price of $10,500 means that you can receive $1,500 cash/equity back) – step into a newer vehicle and enjoy all of the benefits that you will be receiving today like new styling, safety and technology features, full warranty and virtually no maintenance or repairs to have to worry about.

Most of our customers choose this finance option because of its flexibility and privileges. Please take a look at these other additional benefits which will allow you to make a more informed decision.” (Review the additional benefits of leasing with the customer if necessary.) “As you can see, leasing has many benefits over financing. Let’s try it out on this purchase and please remember that if you would like to keep the vehicle, you’ll have that opportunity at any time throughout the term and an option at maturity. When would you like to take delivery - Thursday, Saturday or next week sometime?”

“I drive too many kilometers!” I understand Mr. Jackson. Kilometers are perhaps the most significant cause of a vehicle’s depreciation and it’s understandable how one would initially believe that just buying a vehicle out-right in this situation would seem to be correct. However, let’s look at the depreciation that you would incur under normal driving conditions: As you can see, the depreciation on this vehicle (sale price less residual) is i.e. $15,000. If you were to drive 96,000 kms., the vehicle will have depreciated at a rate of almost $0.16 per km. ((The Manufacturer)) allows you the opportunity to purchase additional kilometers today in anticipation at a rate of only (6 / 8/ 10 ¢) per km. so you’ll: 1. Not have to worry about what the vehicle might be worth 4 years down the road. 2. In purchasing additional kilometers, it allows you to properly pay for the use of your vehicle (the depreciation) not leaving you with any mileage penalties at the end or an awkward situation if you were to owe more on the vehicle than it’s worth under a conventional finance agreement. (negative equity or “upside down”)

3. It’s the cheapest driving that anyone could ever pay for. If you wanted to sell or trade-in your vehicle 4 years from now and the vehicle had for example, 130,000 kms., you would have far more difficulty in trying to sell the vehicle than if it were to only have 90,000 kms. In fact, you would have to accept far less of a sale price or trade-in allowance because of the kms and you will have incurred the full impact of the vehicle’s depreciation. In purchasing additional kms. at a reduced rate from ((The Manufacturer)) at inception, you’ll cheat on the rate of depreciation and not be on the hook at the end of the term. (Review the additional benefits of leasing with a customer if necessary.) As you can see Mr. Jackson, it’s in your best interest to lease the vehicle and purchase additional kms. When would you like to take delivery -Thursday, Saturday or next week sometime?”

“It will cost me more in the long-run.” Not really. Factor in the costs of maintaining a vehicle after the comprehensive warranty period is over and any repair costs that can accumulate over an extended period of ownership and a leasing proposition is a much wiser investment.

According to CAA, consumers will spend on average $120 per month to maintain their vehicle after the comprehensive warranty expires. As you can see Mr. Jackson, it’s in your best interest to lease the vehicle, When would you like to take delivery - Thursday, Saturday or next week sometime?”

“I don’t want to be left exposed to charges for any excess wear and tear!” I understand how you feel Mr. Jackson but let me share this analogy with you if you owned the vehicle and came in to trade it one day: You visit the dealership on a Saturday and the sales manager places a value on your vehicle. Over the weekend, you visit a shopping mall and someone clips the side of your vehicle causing $800 in damage or a stone hits your windshield or a misplaced cigarette causes a nasty burn hole in the upholstery. When you return to the dealership, the sales manager will logically have to deduct the cost of repairs from the initial appraisal. (a trade allowance will be reduced by the cost of repairs i.e. $10,000 - $800 in body damage = a net trade-in allowance of $9,200) Your vehicle has depreciated over the weekend and you have incurred additional depreciation in the form of a lower trade-in value. Selling your vehicle privately would produce the same result but also may make your vehicle less desirable or less marketable unless you invest in the repairs. In the same way, when you return a vehicle that has some excess wear and tear or a missing item, the manufacturer has a right to charge you for the repair, replacement accessory or components. Whether you finance or lease the vehicle, excess wear and tear or missing items depreciate the value of the vehicle and you either incur the depreciation or are responsible to pay for it. You do have the option to make any repairs or replacements yourself should you find yourself in that situation. The manufacturer actually is quite liberal with excess wear and tear charges today. Let’s have a look at the brochure (or the actual lease agreement) and you’ll see what I mean. (Review the manufacturer’s pamphlet on acceptable wear and tear parameters or the actual lease agreement.) Should you still have a concern or to further protect you from excess wear and tear damages, we have XS Wear coverage that we can

include in your monthly payments for only about $x per month. It will cover any excess wear and tear damages that you will incur on the vehicle up to $3,500! Now, that’s a great deal of abuse that you’ll have the luxury to bestow upon your vehicle isn’t it! (Review the additional benefits of leasing with the customer if necessary.) I believe it’s in your best interest to lease it. When would you like to take delivery - Thursday, Saturday or next week sometime?”

“I can’t write it off!” Understandably Mr. Jackson, having the privilege of writing the lease payment off is just one benefit of leasing. Leasing is the popular financing choice for customers today. In fact, X% of all our customers lease their new vehicle and for good reasons. Let’s take a look at some of these benefits that will allow you to make a more informed decision. (Review the additional benefits of leasing with the customer if necessary.) As you can see, it’s in your best interest to lease it. When would you like to take delivery - Thursday, Saturday or next week sometime?”

“I’ve heard horror stories!” I understand Mr. Jackson. I had a customer who just recently took delivery of a brand new Cruze and leased it. He had one of those horror stories to tell me. He had taken out an “Open End” lease which had an unlimited kilometer allowance. He had a very low monthly payment and a high residual. The lease did allow him to drive as many kilometers as he wanted but he was responsible for the lease end

value (the residual). When a deal looks to good to be true, it usually is. He returned his vehicle with 180,000 kms. to discover that he was responsible for the residual value of $13,000. With the high kms. on the vehicle, the dealership had great difficulty in finding a buyer who would want to pay more than $8,000 leaving my customer with the liability of a $5,000 shortfall. He ‘bit the bullet’ on part of it and he consolidated the balance of his shortfall into a new “Closed End” lease where he is not responsible for the value of the vehicle at the end of the lease. Today, ((The Manufacturer)) guarantees the future value of your vehicle and you will not incur a loss should the market value fall below their estimated future residual value. In this way, you are fully protected against market depreciation and can minimize the overall cost of operating a vehicle. Should the value of your vehicle exceed the residual value, you have the option to realize that equity by either selling it privately or by trading it in to us. It’s a win-win scenario! Here are some additional benefits that will assist you in making a more informed decision. (Review the additional benefits of leasing with the customer if necessary.) As you can see, it’s in your best interest to lease it. When would you like to take delivery - Thursday, Saturday or next week sometime?”

“I’ll have to deal with the buyout at the end!” I understand how you feel Mr. Jackson. Actually, all of our customers are quite pleased with the lease maturity procedures that we offer. With about 4 to 6 months remaining on your lease, we’ll invite you back to the dealership at your convenience (could be coordinated with an oil change) to execute a market value assessment of your vehicle. At that time, we’ll check our guidelines to give you an idea of

the value of your vehicle should you be considering to buy it out. Often times, the market value will be higher than the residual amount in which case, you will have the comfort of knowing that you are buying a vehicle that is worth the price that you’re paying. We’ll provide you with extended warranty options and some different payment plans to complete the buyout that may suit your then current financial dimensions. You’ll also have the option to realize some equity should you wish to sell it privately or trade it in to us. You may want to get another vehicle. Should the market value of your vehicle fall below the guaranteed residual amount, you can avoid a loss or perhaps have the knowledge that you can stretch your money farther by buying another similar vehicle that is available but with less kilometers or with far more features. Your needs, desires or financial situation may have changed in which case, you’ll have some great options to consider as opposed to remaining finance payments. (Review the additional benefits of leasing with the customer if necessary.) As you can see, it’s in your best interest to lease it. When would you like to take delivery - Thursday, Saturday or next week sometime?”

“I’m going to keep it for a long time!” I understand Mr. Jackson. It’s great that you like the vehicle so much. Some of my other customers felt as you do today however, upon a further examination, they thought otherwise. With your permission, I would like to share with you what they discovered. With the current low lease rates that the manufacturer is offering, the monthly lease payments are affordable and there are many benefits that you can take advantage of during the first part of your ownership should you wish to keep your vehicle for a long time. (Review the additional benefits of leasing.)

With the incredible explosion of technologies and features and the new line-up that GM has for consumers in just a few short years, you would want to give yourself an option to upgrade. Just think how fast people change their cell phone or computers when new ones come along. Why don’t you take advantage of leasing and if you want to keep your vehicle, we’ll complete your purchase for you when you decide. Did you want to use your old plates or get some new ones?”

“If I lease it, I’ll be on the hook for it ‘til the end!” I understand how you feel Mr. Jackson. If you purchase finance the vehicle, you have a total financial obligation for the entire price of the vehicle plus all applicable taxes. You are actually financing more than what the vehicle is worth on day 1. Unfortunately, vehicles depreciate and the rate at which you pay off your loan does not match the rate of depreciation of your vehicle in the initial few years. In fact, generally it’s not until the last year of your financial payment plan that your vehicle becomes worth more than what you owe on it (equity position). Should you wish to get out of your vehicle before this time period of your loan for any reason, the market value will not generally be close to the payout (negative equity) and you will either have to make up the difference or perhaps consider consolidating the shortfall on another vehicle loan if permitted. With a lease, you have several options that offer you more flexibility than financing does. You can have someone take-over the lease payments and have all the financial obligations removed from you. Leasebusters.com is one of the most popular sites that people use for such a scenario.

You can sell your vehicle privately just as you could with a finance purchase. You can trade your vehicle in to us just as you could with a finance purchase. You can either pay the difference or consolidate any shortfall into a new lease. Leasing has far greater advance limits than financing options providing you with more flexibility. (Review the additional benefits of leasing with the customer if necessary.) As you can see, it’s in your best interest to lease it. When would you like to take delivery - Thursday, Saturday or next week sometime?”

“I think I’d rather pay cash for it!” I understand how you feel Mr. Jackson. Many of my other customers felt as you did until they discovered a great way to get into their vehicle but with some interesting options. With a single payment lease, you would pay the manufacturer for the use of the vehicle today and have no payments for 4 years. At that time you’ll have 3 great options to choose from...it’s that simple. These customers found that they liked the fact that the manufacturer was on the hook for the value of the trade-in at the end and that they were not. They also found that they could put the amount of money that they were saving to better use. (Review this cash opportunity table with your customer.)

(Review the additional benefits of leasing with the customer if necessary.)

As you can see, it’s in your best interest to lease it. When would you like to take delivery - Thursday, Saturday or next week sometime?”

“The lease payment is higher than the finance payment.” Yes it is but, if you can afford the extra few dollars, you’ll enjoy the benefits that leasing will provide you versus conventional financing. (Work out how much extra the lease payment will be per day – this is termed ‘reducing to the ridiculous.) (Review the benefits of leasing using your leasing benefits card.) Mr. Jackson, isn’t it worth just ($X/day) knowing that the risk of ownership is removed should the vehicle depreciate to a value less than the residual value – you can walk away and ((The Manufacturer)) will bear the loss. If the vehicle is worth more, you get to cash in on the equity. It’s a win-win proposition.”

“The interest rate is 0% to finance; why would I pay any interest at all to lease?” I can see the logic and at first glance, one would jump at the 0% financing but take a moment and consider the benefits that leasing will provide you. (Review the benefits of leasing.) For just ($X/day) wouldn’t it be a worthwhile investment to enjoy options instead of obligations.”

In business, it is Said:

BUY things that appreciate. LEASE things that depreciate.

For further information or to inquiry on other training elements, contact:

Anne Preston, Training Manager 1.888.993.6468 [email protected]