| Q. How does a lease work? |
| A. Leasing a vehicle is essentially contracting to "rent" that vehicle for a certain period of time at a fixed cost. You are not responsible for the car's "residual value", or purchase price at the end of the lease. Since you are paying for only a portion of the vehicle's value, you enjoy monthly payments 25% to 40% lower than you would if you purchased a new car! One of the big advantages to a FairLease is that no down payment is required. If you choose to make a down payment, it will reduce your monthly payments even more. This is called a Capitalized Cost Reduction, and can be paid in cash or as a trade-in. Manufacturer and extended warranties apply exactly as they would if you purchased the vehicle. You are responsible for any repairs and regular upkeep. |
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| Q. Why is leasing so popular? |
| A. As the price of vehicles continues to increase, many people do not wish to pay the high payments associated with conventional financing. Leasing allows you to drive more car for less money each month and have the ability to get a new car more often. Additionally, it helps conserve cash for emergencies or other investments. Buying a vehicle continues to be a poor investment because it ultimately depreciates to have little or no value. |
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| Q. Why should I lease through an independent lessor such as FairLease versus a dealership? |
| A. Independent lessors, such as FairLease, provide a service. FairLease can provide you with unbiased information on a variety of vehicles and can, in most cases, pick up and deliver your vehicle directly to you. A dealer has only the make and models he or she sells available for you to lease. Dealers also provide lease agreements through a captive finance company. They do not own or control your lease. These captive finance leases add considerable profit to the dealer/s bottom line and usually are not in the customer/s best interest. |
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| Q. Why should I lease? After making all the payments, I have nothing? |
| A. When you lease a vehicle, the monthly payments you make consist of depreciation and lease fees. At the conclusion of the lease, assuming used car market conditions have not changed, the balance remaining unpaid should represent the then approximate current value of the vehicle. When you purchase a vehicle and finance over the same period of time, you will have expended a greater sum in monthly payments. At the end of the finance period, you now own a depreciated asset. If you then want to recoup the excess funds you have paid, you would then have to sell the vehicle. It is true that for some people leasing is not an appropriate option. But that is true only if you intend to use the vehicle in such a manner that its future value will be nominal. When you purchase a vehicle, you expend more money than you need to, and you put yourself into the used car business. When you lease, you pay only for the portion of the vehicle you have actually used. You have not depleted your cash reserves and you can surrender your vehicle and have a new vehicle for a modest fee. |
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| Q. I drive approximately 15,000 miles per year. However, the lease with a 12,000 mile per year clause has a better monthly payment. What should I do? |
| A. Lower anticipated miles result in lower monthly payments. The future value of a low mileage vehicle is greater than a high mileage one. So, you pay less depreciation. If you know from the onset that you cannot stay within the mileage limitation, it is a much better economic decision to choose a lease with a proper mileage clause. You will have slightly higher monthly payments, but will have limited your exposure to excess mileage fees at lease end. |
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| Q. What is normal wear and tear? |
| A. Your lease contract contains a clause which defines the measures of normal wear and tear, and excessive damage. As a lessee, you are responsible for damage to the vehicle. When your lease terminates and you return the vehicle, FairLease will inspect the vehicle to ascertain if there is any excessive damage. Excessive damage is usually defined as damage that is greater than reasonable. |
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| Q. How much out of pocket is required up front? |
| A. The total cash due at the beginning of a FairLease can be limited to a monthly payment and in some cases a security deposit is required, allowing you to hold onto your savings, rather than investing your hard earned money into a depreciating asset. |
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| Q. Why do lease payments vary so much for the same vehicle? |
| A. Payments will vary based on differences in capitalized amounts and depreciation assumptions. Depreciation is the largest component of a monthly payment. A lessor calculates depreciation by estimating the “end of lease value” or “estimated residual value.” When a lessor anticipates a high residual value, payments will be lower. Conversely, when a lessor estimates a lower residual value, the monthly payments are higher. Most often the differences in estimating the residual value are covered by terms and conditions contained in the lease contract to provide safety factors to the lessor. Some leases contain low mileage clauses with high excess mileage fees: some have high lease termination fees; others contain some very specific wear and tear provisions. It is important when comparing that you consider all the terms and conditions of the lease so that you will be able to make an informed decision. |
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| Q. Can I terminate my lease early? |
| A. A FairLease lease agreement provides an early termination clause. When terminating a consumer lease early, you will be responsible for all payments that have come due and have not yet been paid. You will also generally be responsible for the difference between the unpaid portion of the depreciation and the value of the vehicle. You may be required to pay an early termination charge. |
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| Q. Can I trade out of my lease early? |
| A. Ideal trading time should be interpreted as that period in which the cash value of the leased vehicle is close to or equals the gross payoff of the lease contract. The overall condition of your vehicle is very important when considering early termination. If your vehicle is in excellent condition and has below average miles, your trade-in value will be greater and can speed up the trade-in process. Vehicles which are in poor condition and have excessive miles are much harder to trade out of early. As a FairLease customer you can be assured that your satisfaction is our primary objective. Since renewal business is essential to our success, our leasing consultants will assist you should you wish to trade in your lease vehicle. However, at no time during the lease term can we guarantee early lease termination without liability to you. |
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| Q. Why is the cost of insurance so much higher for a leased vehicle? |
| A. This is a common misunderstanding. The cost of your vehicle insurance is not greater because your vehicle is leased. The lessor will be listed on your insurance policy as additional insured and the loss payee. There is no charge to you for this provision. The cost of your vehicle insurance is impacted by the coverages you are required to purchase when you lease or finance a vehicle. All lien holders, lessors, and funders require that you maintain full physical damage coverage – that is coverages for any damage the vehicle may sustain in an accident and for the theft of the vehicle. Often leasing companies will also require you to carry limits of coverage on the liability portion of your policy in excess of state minimum. In most states, raising the limits of liability increases the cost of your insurance only slightly. The big component of insurance cost is the cost of collision and comprehensive coverage. You would have purchased this insurance under any circumstances with the purchase of a new vehicle. Just as a lender would not be willing to take the risk of total loss, neither is the lessor. |
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| Q. How do I know if leasing is for me? |
| A. Our goal at FairLease is to provide individuals with a leasing program that is honest, professional, and safe. That's why we call it FairLease. The decision of whether to buy or lease can be confusing. We make the decision easy with personal service and flexible terms. And our leases can be customized to meet your personal driving habits. If you are used to having a car payment, drive fewer than 20,000 miles a year, and if having a lower monthly payment means more to you than owning your car, you are probably a good leasing candidate. |
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| Q. Is a FairLease available anywhere in the United States? |
| A. That is our ultimate goal. Refer to the Business States Map on our site to determine if we provide leasing in your State. We may also lease in States not indicated as active if you are a repeat client. The best way to see if we can lease in your area is to call a leasing consultant. |
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| Q. Who is FairLease? |
| A. FairLease is a program developed by a credit union. Our FairLease program combines the low financing rates of a credit union with the buying power of a leasing company to ultimately provide customers with below market lease payments and outstanding customer service. We can offer leasing services to anyone residing in States where we do business -- please refer to our Business States Map for availability in your State. |
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