Open-ended vs. Closed-ended Leases

Open-ended vs. Closed-ended Leases

by John Koehler Comment Closed
**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.** You may see a lease referred to an "open-ended" or "closed-ended", if you do it's likely to be in the fine print, legalese, or wherever the dealer/manufacturer/lessor has put some important but confusing details they hope you won't read.  Even worse, maybe the advertiser won't put it in the fine print but puts "open-ended lease" or "closed-ended lease" in big print next to some out of this world offer - how do you know whether it's a good deal or not? What's the Difference Between Open-ended and Closed-ended leases? In short, in an open-ended lease the lessee is the one on the hook if the actual value at the end of the lease is below the residual value set at lease inception, and in a closed-ended lease it is the lessor.  Usually, your contract will be a close-ended lease, but it’s still...
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Leasing a Final Model

Leasing a Final Model

by John Koehler Comment Closed
**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.**   On April 24 the Ford Motor Company (Stock Info:[stock_quote symbol = "F"]) announced that it will be ending production of all its existing cars (so not including its trucks, SUVs, or crossovers) in North America with the exception of the Mustang by 2020.  Armchair strategists and analysts can talk all day about whether this is the right move for Ford and how other automakers will react (and many have), but we'll use this opportunity to focus on whether it makes sense to consider leasing a vehicle that won't have a new version for sale by the time your lease expires. First Things First: Follow the Money It's important to consider the most basic reason why Ford made this decision to do away with making and selling sedans in the North American market - they weren't generating sufficient profit on these vehicles.  This...
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Understanding Lease Ad Mailers

Understanding Lease Ad Mailers

by John Koehler Comment Closed
**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.**   With the spring thaw finally upon us (more or less), the automotive world is gearing up for another summer sales season.  While everyone assumes that direct mail is out as a marketing strategy, there are still a lot of mailers sent out, both by dealers and by manufacturers, as a way to present and promote vehicles.  And again, as we described in our first article on auto ads (which focused on online ads), presenting a lease deal is particularly advantageous in the small space available, because lease deals require relatively few numbers and text to present the offer to the largest audience. Recap: What the ad will and won't show Any lease ad, regardless of the medium used (online, mail, newspaper/magazine, television, radio, billboard, etc.) will always show a few things to define what is being offered: The monthly payment The term The amount...
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‘Tis The Season

by John KoehlerNo Comments
**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.**   As we come to the last few weeks of the year the automotive industry's sales and marketing engine is revving close to the red line.  Obviously, anyone trying to get attention in the retail business in December needs to do a lot of marketing, and also needs to be ready to make a deal - and car dealers are definitely ready to make a deal this month. A lot of the manufacturers build off a recurring theme that they pull out of storage as the weather cools and the days get short the way people go find the wreath and holiday lights for a month or so of display.  That's why people know "A December to Remember", "Season's Best Event", "The Winter Event", and of course, "Toyotathon" - which didn't even start as a year-end event (the first one was in...
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Innovation Series Summary

by John Koehler Comment Closed
**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.**   Through this month we looked at how four areas of innovation are dramatically changing automobiles: how they move, how they’re accessed, and how our experience in them is changing.  Specifically we looked at Vehicle Connectivity, Mobility Solutions, Fleet Electrification, and Autonomous vehicles.  All of these innovations are at least partially rolled out, but at the same time it is clear that there is an expectation of dramatic change in the next 5-10 years, where many of the items that are a novelty today will become at least a substantial minority, and in some cases potentially the dominant technology in place. I had the opportunity earlier this week to attend an excellent conference called AutoMobility LA – it occurs during the 4 days preceding the annual Los Angeles Auto Show.  The conference organizers did a great job of assembling excellent speakers and...
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Autonomous Vehicles

by John KoehlerNo Comments
**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.**   Today we look at the last of the four major automotive innovations reviewed in this series: autonomous vehicles, also known as self-driving cars.  This was placed at the end of the series because it is also the innovation that will be the latest in coming, and especially in becoming dominant, if it does.  As a reminder, the other three innovations we have covered are Vehicle Connectivity, Mobility Solutions, and Fleet Electrification. Autonomous Vehicles Overview Almost every vehicle on the road today has some autonomous features - the first one available was cruise control - but with features like parking assistance, lane departure warnings, more advanced cruise control, and collision avoidance features new vehicles are more autonomous than ever.  Beyond that there are several companies, including Waymo, part of Alphabet (nee Google), that are developing and testing self-driving vehicles.  As we get closer...
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Vehicle Electrification

by John Koehler Comment Closed
**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.**   In the earlier parts of this series we covered innovations in automotive that don't impact vehicle manufacturing directly, but now we switch gears to one of the largest changes to automotive design in one hundred years: phasing out the internal combustion engine in favor of electric power, and not just doing it in one model or for one make; but electrification of the entire fleet. What is Fleet Electrification? Fleet electrification refers to the move industry-wide (manufacturer by manufacturer) away from using internal combustion engines that require gasoline or diesel fuel towards designing and building vehicles that use only batteries or fuel cells, potentially with an interim step where the vehicle lineup consists of all hybrids and electric-only vehicles.  Obviously, a single model having an electric propulsion system (either all electric or hybrid) isn't new: the first Toyota Prius was introduced 20...
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Leasing in a World of Uncertainty

by John Koehler Comment Closed
**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.** Last time we quoted the Ancient Greeks here was on the page "Know Your Credit", and we will give a brief update about that, but this week's theme is about the Ancient Greek's classical elements: Earth, Fire, Water, Air, and the Void, and how they have each been kicking North America's behind over the past few weeks, especially this week! Earth - an extremely strong, and unfortunately deadly, earthquake, with an 8.1 magnitude, struck off the coast of southern Mexico on the evening of September 7th, and toppled hundreds of buildings. Fire - many of the western states of the U.S. as well as British Columbia, Canada have been dealing with wildfires, that have been substantially worse than predicted based on the cold wet winter that the area had, and it has caused some evacuations, with many more possible if the...
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Understanding Online Lease Ads

Understanding Online Lease Ads

by John Koehler Comment Closed
**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.**   Do you have any idea what the easiest part of leasing is?  The answer, to the detriment of the unprepared consumer, is advertising the lease deal!  Think about the lease deals you've seen advertised before -  on TV, in newspapers or other print, or even on billboards: all of them focus on just three numbers (in this order): The monthly payment The number of months The amount due at signing / down payment amount The advertisers then breeze through the other legally required details as quickly, or in as small of font, as their lawyers will let them.  Comparatively, advertising a vehicle for purchase either needs to focus on the full purchase price, which is tens of thousands of dollars, or try futilely to advertise a single monthly payment for consumers with thousands of unique credit and down payment situations.  So...
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At The Dealership

At The Dealership

by John Koehler Comment Closed
**This post contains affiliate links and the publisher may be compensated if you make a purchase after clicking on these links.**   You’re at the dealership surrounded by shiny, new vehicles. Your eyes are dazzled by brilliant colors, glittering rims, and your senses are completely overwhelmed with the rush of that new car smell. You’ve done the research and know you want to lease a new car. You look up and the smiling car salesman is walking toward you. He shakes your hand and asks how he can help you. You mention the car you’ve had your eye on, and together you glide across the showroom floor. Here it is, your dream car, and you’re ready to slip into the driver’s seat and take her for a spin. The dealer takes your driver’s license, grabs the keys, and you make your way to the lot. Your fingers grip the steering wheel; its a perfect fit in your palms. The sun is shining, and...
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