I haven’t spent much time talking about leases, but they can be a great source of gross profit and ultimately new-car sales commissions. Leasing new cars is one area that many sales people pay little attention. I don’t know if it is because they’re unfamiliar with leasing or their customers just don’t believe in leasing, but there is a great potential for creating gross when you lease cars.
Today’s car buyer is not all that familiar with leasing vehicles other than what they see advertised on TV with low payments. The automakers spend a fortune advertising low-priced leases, yet most dealerships lease very few vehicles. I have found that dealerships that spend time and resources educating their salespeople about leases ultimately lease more cars. The good news for us is that we have an opportunity with leasing to increase our gross and ultimately our commissions when we are focused on leasing.
Sure we know how leases work but most of our customers don’t understand and unless we do a very good job of selling them on the lease their standard answers are “but I want to own the car” or “I don’t’ want to rent a car”. So let’s spend a little bit of time talking about leases and how you can sell more cars that ultimately put more money in your pocket which is all why we are all here anyway.
We all know that a very large percentage of our customers are payment oriented. So if we can educate them on the virtues of leasing and show them how they can get a new car with lower payments we have a much better chance of making a deal. Leases come in a variety of different terms for the most part, but a large percentage of them are for 36 months. With that thought in mind let’s cover some of the things that we need to talk about to your customers about when we are pitching them on a lease.
Selling the Lease and the Car
When talking leases to the customer we not only have to sell the car, but we also have to sell the lease. Leases are often mysterious to the customer and they’ve heard different kinds of horror stories about costs at the end of the lease and mileage charges. So the 1st thing you need to cover are their mileage concerns, obviously you don’t pitch a least a customer that puts on 30,000 miles, a year but that is uncommon with most buyers. Find out their mileage requirements and go from there. If they fit into the average 12 to 15,000 miles a year they are a perfect leasing candidate.
10 Points to Turn the Car Buyer into a Car Leaser.
1. You can put down little or no money and have much lower payments than buying.
2. Your vehicle will be covered under warranty the entire time you drive it so you don’t have to worry about any costly repairs.
3. You only pay for the amount that you use the car rather than paying for the entire car, this way you could have a new car every 3 years and save money.
4. The way technology is advancing so quickly many cars may be outdated in 7 years, wouldn’t it be much better to have an up-to-date more fuel-efficient vehicle every 3 years
5. Many of our managers here at the dealership lease their personal vehicles that way they know they will always have a new car that’s covered by warranty and they will always have the latest model.
6. You don’t have to worry about being upside down on your car loan and paying for something that is worth less than you owe.
7. On a conventional five-year car loan you could find yourself paying for expensive repairs and making the monthly payment at the same time during year four and year five.
8. At the end of your lease period all you have to do is drop off the car and the keys because leasing allows for normal wear and tear.
9. Yes, you own your car after you pay your loan off in 5 years but over the course of those 5 years you would have made much higher payments then you would if you leased the vehicle and you have an old car.
10. Besides having the option to return your vehicle at the end of the lease you can opt to purchase it for the fixed amount on your contract, you can sell it if you choose, you can trade it in at anytime during the lease period or you could simply return it and walk away. You are in the driver seat when you lease a vehicle and you have more options that you would when your purchase.
When you can get a customer interested in leasing their next car, there is usually less emphasis on the price and more emphasis on the payments, which always creates more gross. Most customers don’t fully understand leasing or at least not the financial aspects. When you focus on selling the car and the benefits to them when they lease it can very often turn into more car sales commissions for you. Sure there are times that you’ll end up with a mini when you lease a car, but a mini is much better than no deal at all.
Another bright spot for the car salesman when it comes to leasing is a how often you get to see them again. If you do a good with follow-up to stay in touch with them in another 3 years they will be back to lease another car. You know that 36 months after delivery they will need a car. Lease a few cars to your customers every month and you will have a steady stream of customers and traffic coming in for cars in the future.
Later, Fresh Up on the Lot