If You Are at the End of Your Lease, You May Be Wondering How to Finance a Leased Car
We’ve discussed in previous articles that purchasing a leased vehicle, also known as an off-leased vehicle, can be a great value for consumers. Leased cars take the biggest depreciation hit over their first few years of life, making them much more affordable at the end of their leases. But how do you finance a leased car?
Like new car financing, there are numerous options to acquire loans or sometimes leases on lease purchased vehicles.
Finance options for an off-lease purchase:
- Traditional Bank Financing: If the car buyer has an existing banking relationship and good credit, they can go to their local branch, complete an auto loan application and often get approved at a competitive interest rate. To complete the loan, the bank needs a bill of sale and information on the seller to complete the transaction, and that may necessitate a trip or two between the bank and seller’s location to complete all the necessary documents.
- Credit Unions: Credit Unions work like a bank but can often offer terms and loan requirements that may be more flexible. If the buyer has some “bruised credit issues,” a credit union might be a good, local option. Again, paperwork including all the lien information must be completed by the vehicle seller and the credit union to meet all state requirements.
- Leasing an Off-Lease Vehicle: Leasing an off-lease vehicle is also an option that consumers might consider based on the price of the vehicle and the projected future value (the residual value). Leasing may not require as large a down payment and monthly payments are usually lower since the full value of the vehicle is not depreciated into the full term. Leasing does require a very good credit standing and some states require higher insurance liability limits so research should be done in your area before choosing this option. Remember with a lease the consumer is essentially “renting the vehicle” for the full term and usually doesn’t build up any equity before the end of the term.
- Car Dealerships: Dealerships often sell leased cars and provide a finance department that works with various lenders. When using their finance department it’s important to know your credit standing, so you obtain a rate that is appropriate for your auto loan. Consumers can speak with their banker or request a copy of a current credit report that often provides a credit score.
- Independent Finance Companies: Companies like Innovative Funding Services (IFS) aren’t tied to the source of the vehicle, but by representing some of the largest lenders and banks in the United States, can offer customers competitive auto loan rates, a broad spectrum of approvals across all credit tiers and even extended terms, which can offer auto buyers the flexibility of lower monthly payments. Often times, these organizations work with top-tier fleet companies that have a great variety of previously leased vehicles at attractive prices, as well.
Ready to finance a leased car? We invite you to compare each option to what Innovative Funding Services can provide. Check out the benefits of the IFS lease purchase loan programs now.
This post was contributed by Mark Dubis, Automotive Consultant and Writer for the auto industry and former owner of Arrow Motorcar one of the top independent leasing companies in South Florida.