Advantages of Leasing
What is a lease, anyway?
 You agree to use a vehicle for a specified period of time.
You make monthly payments during that specified period of time.
You maintain the vehicle.
You purchase the required licenses, pay any taxes, and keep the insurance up to date.
At the end of the specified time, you return the vehicle with nothing more than normal wear-and-tear.
Over the last few years, leasing has become the most practical method of acquiring vehicles. There are many benefits to leasing your vehicle. What is most important to you depends on your particular circumstances.
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Improved Cash Flow
Most people agree, the greatest benefit of leasing is improved cash flow. With no down payment and lower monthly payments, the retention of cash in business or personal finances can be improved. Reinvesting this cash into corporate growth or personal items that appreciate in value can return a much greater dividend.
Lower Monthly Payments
Because you only pay for the portion of the vehicle that you use, your monthly payments are lower than if you purchase the same vehicle.
Tax Advantages
There can also be some tax advantages for businesses to leasing. In certain circumstances, leasing may yield a more favorable tax result than a purchase. We suggest you seek the advice of your tax professional to determine what's best for you. There are also sales tax benefits to leasing. When you purchase a vehicle, sales tax is due immediately. However when you lease, sales tax is only payable on your capital cost reduction (down payment), and on the monthly payments.
More Vehicle For Your Money
Because you are only paying for the portion of the vehicle you use, and because your monthly payments are lower, you may be able to afford to lease a more expensive vehicle than you could purchase.
New Vehicle More Often
Because of lower monthly payments and defined lease periods, you can get into new vehicles more often.
Manufacturers' Warranties
Many lease periods parallel the timeframes for manufacturers' warranties, allowing you to have warranty coverage for as long as you drive the vehicle.
Choices & Flexibility
CMP Automotive Lease is a flexible leasing company. By looking at all your options, we can analyze your specific needs and give you practical, helpful recommendations and solutions. Based on this information, we can design a lease to your individual needs.
Glossary
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Lessee:
The customer who is leasing the vehicle (you).
Lessor:
The company that owns the vehicle and is leasing it.
Open Lease:
Also known as a Finance Lease, Capital Lease or Equity Lease. This is an agreement where the monthly payment and residual value (buy-out) are specified at the start of the lease. There are no kilometre restrictions or wear-and-tear clauses in this type of lease because, at the end of the lease, the lessee guarantees the value of the vehicle
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Closed-End Lease (Purchase Option Lease):
Also known as a Net Lease, Operating Lease, Fixed Cost Lease, or Purchase Option Lease. Unlike an open lease, the lessee does not guarantee a residual or buy-out value. The monthly payment is fixed at the outset of the lease. In addition, the lessee agrees to a specific number of monthly payments and to terms regarding the vehicle's condition and kilometres. At the end of the lease, the lessee returns the vehicle to the leasing company. This allows the lessee to fix costs over the term of the lease for budgetary purposes. Some closed-end leases also offer the lessee an option to purchase the vehicle for a specific "fair" market value.
Term:
The length of the lease in months.
Kilometre Allowance:
The total kilometres allowed the lessee during the length of the lease. The lessee may pay a penalty per kilometre if the kilometre allowance is exceeded, depending on the type of lease.
Residual:
Also known as Fair Market Value or Lease End Value. The value, specified in the lease, of the vehicle at the end of the lease. Occasionally, the lessor gives the lessee the option to purchase the vehicle for this amount at the end of the lease. This is not always the case. Check to see that the lease contract includes this clause.
Purchase Option:
Sometimes called Residual or Fair Market Value. This is the amount that the vehicle can be purchased for at the end of the lease. Fixed purchase options have a specific dollar amount or a fair market value option. This number may or may not be determined until the end of the lease, and could reflect the current market value.
Disposition Fee:
A stated amount that the lessee must pay if the lessee does not purchase a vehicle at the lease end value. This fee varies greatly from lease to lease. Many lessees do not notice this part of their contracts until the lease is over, so it is important to be aware of it from the beginning.
Excess Wear-and-Tear:
Normal wear-and-tear is the stress on a vehicle caused by normal use. At the end of a closed-end lease, the lessor holds the lessee responsible for wear-and-tear that is in excess of "normal". Typically, a clause in the lease agreement spells out excess wear-and-tear in detail.
Capitalized Cost:
The total price of the vehicle, capitalized by the leasing company, after down payments or trade-ins are deducted.
Depreciation:
The amount of the monthly payment that goes to amortize the principle. Depreciation also refers to the reduction of the vehicle's value due to age, mileage and wear.
Capitalized Cost Reduction:
An amount paid by lessee at delivery to reduce the capitalized cost and thus reduce the monthly lease payment.
Security Deposit:
Money collected at delivery for security, typically in the range of one monthly lease payment. The deposit is refunded, minus any lease-end charges for wear-and-tear or excess kilometres, after the lessee returns the vehicle and it is sold.
