Leasing FAQ

VTown Auto Leasing FAQ’s

Isn’t leasing just for business use?

No, however, businesses were the first to recognize the advantages of leasing. Over the past two decades, more and more individuals have recognized the advantages of leasing. Today, leasing by individuals outpaces leasing by businesses.

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What are the financial advantages of leasing?

By leasing, you can drive a nicer, more expensive vehicle for about the same payment as a cheaper vehicle, because the nicer vehicle has a higher resale value. Leasing conserves capital because no down payment is required on a lease. Leasing defers sales tax, and generally offers significant tax savings if the vehicle is used primarily for business.

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If I lease, I won’t own anything at the end of the lease. Right?

Leasing is designed for individuals or companies who wish to replace their vehicles every three years or so. If you finance a vehicle on a 5 or 6 year loan, you will probably not have any equity after three years either, so if you trade every three years, you never “own” your vehicle anyway, and you will miss out on all of the advantages that leasing affords you. Anybody buying a new car every five years or less should consider leasing.

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I drive 20,000 Km’s per year, so I shouldn’t lease because I would have a huge mileage penalty, because leases only allow 12,000 miles per year. Right?

No, not at all. Most car dealers advertise leases based on 10,000 or 12,000 miles per year, because it allows them to quote a lower monthly payment. If you own a car and drive a lot of miles, it will end up costing you more because of the lower trade-in value for your used vehicle. RC Auto can build in extra mileage on your lease so that you do not pay an excess use charge until you exceed 18,000, 20,000, or 25,000 Kms per year or whatever you intend to drive.

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I have seen car dealers advertise 39 month leases. What’s the deal?

Some Banks/Credit Unions allow dealers to advertise and write “Odd term Leases”, like 39 or 42 months. Although it allows for a slightly lower payment, the Banks/Credit Unions are counting on the customer, when they receive their bill for their license plates at the end of 36 months, not wanting to renew their plates and only get 3 months use of the renewal. If the customer terminates the lease early to avoid paying the license fees, this lets the bank off of the hook for guaranteeing the residual value. When the customer understands this before entering into the lease, they will rarely opt for an “Odd Term Lease”. Because we explain this to our clients, we write virtually no “Odd Term Leases”.

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I have poor credit and no down payment, so isn’t it better for me to lease?

On the contrary, leasing requires better credit than a conventional auto loan. Without a down payment there is no equity, and therefore more risk to the bank or leasing company.

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What is the difference between leasing and purchasing?

When you lease a vehicle, you only pay for the portion of the vehicle’s cost that you are using during the lease term. When you purchase a vehicle you actually pay for the whole vehicle, thereby tying up more cash than in a lease.

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Isn’t insurance more expensive on a lease?

On a leased vehicle you must insure the vehicle the same as if you owned it. For the same coverage, the cost of insurance is the same, whether you are leasing or buying your vehicle.

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Can I lease a used vehicle?

Although most leased vehicles are new, we can lease used vehicles up to three years old. We generally prefer to know the history of the vehicle, so that we can be assured that you will not have mechanical or service problems.

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I’ve heard of “Walk-away” leases. Exactly what are they?

A “Walk-away” lease, also known as a “Closed-end” lease, protects the lessee from excess loss of value at the lease termination. If you keep your lease until its termination date, the only things you are responsible for are the condition of the vehicle and the mileage. If you have damage on the vehicle, not covered by insurance, it is your responsibility to repair the damage before returning the vehicle, or to reimburse the leasing company for repairing the damage. Also, if you are over the originally agreed upon mileage in the lease agreement you will be assessed an excess use charge; usually 12-15 cents per mile. If the vehicle is worth less on the market than what the lessor originally thought it would be worth, this is not your responsibility.

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Do I have an option to purchase my leased vehicle at the end of the lease?

Most “Closed-end” leases give the lessee the option to purchase the vehicle at lease termination. The lessee gets the best of both worlds; if your vehicle is worth less than the balance due at lease termination, you may simply turn the vehicle in, but if your vehicle is worth more than the balance due at lease termination, you may exercise your purchase option and “cash in” your equity.

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Who will provide warranty service on my leased vehicle?

A franchised dealer must do all warranty work. We work with all of the reputable dealers in the area to afford you the best warranty service available. We will be happy to assist you in setting up your service appointment with a reputable dealer, convenient to your home or office, where our designated service writer or service manager will assist you.

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Do you take trade-ins?

Yes, we will be happy to handle your trade-in as part of the transaction. We attempt to maximize the amount we can allow for your trade by actually getting several competitive bids for your trade. When you trade your vehicle at a conventional dealership, you are only getting one person’s opinion of the value of your trade.

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What kind of cars can I get through RC Auto?

Because we are an independent leasing and sales company, we can acquire any make or model of vehicles. We stress vehicle value, and because we are an independent, we can help you sort out which vehicles represent the best value to you, the consumer.

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What about rebates?

*If there are rebates available on certain models, we will pass them through to you. Manufacturers use rebates and incentives to sometimes sell, or stimulate interest in slow moving merchandise. When you consider the potential resale value of these slow moving models, the models with rebates may not always represent the best value.

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What is a “Residual”?

The “Residual” or “Residual Balance” is the value that the leasing company thought your vehicle would be worth at the end of the lease. A monthly payment is then calculated to write the balance on your leased vehicle down to that “Residual Balance”.

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What if I want to terminate my lease early?

If you need to terminate your lease before the scheduled termination date, the lessee is responsible for any difference between the value of the vehicle and the balance on the lease at the time of early termination. You lose the “Walk-away” provision you would have had if you had kept your vehicle for the full term of the lease. At RC Auto we counsel our customer before entering into the lease, so that the possibility that you might need to terminate your lease early is very remote.

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What are my “Up-front” costs to get into a lease?

One of the benefits of leasing is that there is not down payment. Your only cost on delivery is the first months lease payment in advance, the first years license and document fees, and the bank acquisition fee.

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What is an “Acquisition Fee”?

This is a fee charged by banks to cover their cost of “GAP Coverage”, Residual Value Insurance, and setup costs, much like a home mortgage.

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What is “GAP Coverage”?

On a lease, where you are not making a down payment on the vehicle, the vehicle, early in its life will depreciate faster than the lease balance goes down. If the vehicle is stolen and not recovered, or if it is totaled, without GAP Coverage, there could be a significant difference between the value your insurance company places on your vehicle, and the balance on the lease. With GAP Coverage, should that happen, your only liability would be your insurance deductible that you have chosen.

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Who is responsible for maintenance on my leased vehicle?

You, as the lessee, would maintain the vehicle the same as if you owned it. However, with a leased vehicle you are getting the best miles of use out of the vehicle, and will be turning the vehicle back in to the leasing company before you get into the higher maintenance costs associated with older vehicles. You will also be covered by the manufacturer’s warranty for all or most of the time you have your leased vehicle.

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How can I be assured that I will get the most accurate, up to date, and honest information on leasing?

RC Auto Corporation is a member of the National Vehicle Leasing Association, and subscribes to their high ethical standards. The National Vehicle Leasing Association has an advanced education program covering all facets of the leasing industry. Those who complete this advanced study program are awarded the designation of Certified Vehicle Leasing Executive. Of three persons in Arizona awarded this CVLE designation, two are employed by RC Auto Corporation.

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What “Services” does VTown Auto provide?

AT VTown Auto we stress the service advantages available to our clients. National fleet discounts are made available on every conceivable item from the vehicle itself, to sheepskin seat covers, to window tinting, to body work….all areas of service. We are there to assist you with any unlikely warranty disputes, or to render a second opinion on any service related items. We are available 24 hours a day. Should you have an emergency, and it cannot wait until normal business hours, our clients can reach us for assistance. Service is extended through the whole term of the lease.

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