Lease to Own, Rent to Own, Lease Here-Pay Here, Lease Here – Buy Here ….. you’ve heard these terms floating around in many conversations and in many print and web articles. The word on the street is that the leasing of used cars is starting to take over the industry and we believe it!
One thing to keep in mind as you begin to look into used car leasing programs is that all programs are not alike. The Lease Here-Pay Here program you saw in the latest industry publication is not like the Lease to Own program that you saw advertised on the internet. Even though the concepts are similar, the program and protection for the dealers can be very different.
Northland Auto Enterprises, Inc. developed the original Ren’T’Own® and Lease’T’Own® programs over 26 years ago. We have the experience and the proven success of knowing what ingredients are necessary to have in a Used Car Leasing program.
Compliant Lease Contract The lease agreement must be Reg. M complaint. Northland has done extensive research on leasing laws and has worked in conjunction with reputable law firms throughout the state to ensure that their contract is complaint. Northland will defend the Ren’T’Own®/Lease’T’Own® contract, at their expense, if it were ever to be challenged by a state agency. This research and backing relieves you from the extra expense of hiring someone to do the work and the risk that you may have missed something critical.
Vehicle Title The business model should operate as having the Dealership remain titled owner of the vehicle until the customer acts on the purchase option or returns the vehicle. Being the titled owner of the vehicle provides the dealership with leverage and is your best defense against bankruptcies, repossessions, and delinquent payers.
Excess Contingent Liability Insurance
Some dealers think that their customer’s insurance is all that’s necessary for a leased vehicle. Keep in mind that the primary insurance is intended to provide physical damage coverage for the vehicle and liability protection for the driver. It does not cover a legal award for damages brought against the dealer as owner of the vehicle.
For example: your lease customer causes an accident in which someone dies and there is a million dollars in damages. The primary policy has a $50,000 limit. Who pays the rest? As titled owner of the vehicle, they will go after you! In order to protect you, the dealer,
Northland offers two levels of Excess Contingent Liability Insurance coverage - GOLD and SILVER - at affordable premiums.
GOLD level provides $1,000,000.00 (one million) per occurrence of Excess Contingent Liability coverage, including Physical Damage with a $1,000.00 deductible.
SILVER level provides only the $1,000,000.00 (one million) per occurrence of Excess Contingent Liability coverage
This coverage is intended to protect your interests from a law suit brought against you as a result of an accident with your Leased vehicle. This coverage also provides legal defense for law suits brought against you, as the titled owner, for damages caused by your customer. Legal defense often costs vehicle owners $30,000 – $50,000 dollars even if the other party doesn’t win!!
Northland’s Excess Contingent Liability Insurance is NOT a replacement for your Garage Keepers Liability coverage. You need to keep your regular Garage Keepers coverage.
Customer’s Insurance Tracking With the GOLD level insurance coverage, Northland assists the dealers with tracking of their customer’s insurance statusat no additional charge. Certain endorsements are added to the customer’s policy to ensure that Northland will be notified of any change of status on your customer’s policy. Should a policy lapse or be cancelled, Northland provides you with an activity report so you know when to take action. In addition, dealers have access to professional Northland Customer Service Representatives who are empowered and motivated to assist the dealers in resolving insurance related issues.
Dealer Training Because each state is different with their laws and expectations, it’s important that dealers aren’t given a generic or high level training. This is not the place for a one size fits all on-line training video. Northland personally trains each dealer and appropriate staff members to ensure they understand the program and understand how to correctly fill out the lease agreement and other documents. Refresher training is available at no cost which comes in handy as new employees come on board.
Specialized Support Northland’s employees have a wealth of experience in many areas such as the auto industry, working with state agencies, state statutes including taxes, insurance, GPS, warranties, marketing, etc… These experienced employees are at your service. If you have a state agency claiming that you aren’t compliant, Northland’s expert will step in and assist on your behalf. If you have an insurance claim that’s being denied, Northland’s expert will step in and assist on your behalf.
Program Enhancements Used car lease programs can also benefit from enhancements such as GPS tracking devices, warranties, dealer management software, ACH processing, website design, and Daily Rentals. Northland partners with several companies to provide these quality enhancements.
There are also several key benefits that the right Used Car Lease program will bring to your dealership.
If you treat the customer right, you’ll have these customers for life by “rolling” them from one lease vehicle to another! You’ll also have their friends and families as customers from referrals.
You become the hero of the community by being able to work with customers that other dealers have turned down.
You own the vehicle so “repossessions” aren’t necessary. You simply recover your property.
Tax benefits! Income Tax is paid only on the payments collected rather than being paid on the full amount of the deal at the end of the first year. The dealership owns the car so depreciation can be taken.
Used Car Leasing can bring in profits much higher than retail sales, wholesale, or BHPH.
Bottom line, don’t re-invent the wheel and don’t settle for an inexperienced company that’s just trying to catch the wave of the exciting paradigm shift we’re seeing in used car sales.
Northland’s Ren’T’Own® and Lease’T’Own® programs have been in place and successfully operated by dealers throughout the United States for over 26 years.