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FINANCING FREQUENTLY
ASKED QUESTIONS |
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What's the difference between a loan and a
lease?
When you obtain a loan for a vehicle, your
down payment and your monthly payments go toward the
total purchase price of your vehicle. When you have paid
off the financing, you own your car.
When you lease a vehicle, you make payments to
use that vehicle over the term of your lease. However,
at the end of your lease, you don't own your car, rather
you return it to the lessor.
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That depends on what you want to drive, how
much you plan to drive it, and how long you expect to
keep it.
It
may be worthwhile to lease rather than obtain a loan
if...
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you want the most car for your monthly
payment
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you drive less than 15,000 miles a year
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you like to trade in your car every three
years or less
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owning your car outright is not important to
you.
It may be
preferable to get a loan if...
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owning your car outright is important to
you
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you plan to enjoy your vehicle for a long
time
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you want to customize your vehicle
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you want the maximum flexibility regarding the
number of miles you drive and how long you keep your
vehicle.
Typically, the monthly payments on a lease are
significantly lower than if you obtain a loan for your
vehicle, while having a loan gives you more flexibility
in terms of ownership.
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What rates do you offer?
We
work
with several financing institutions, to bring you
competitive rates and terms on loans and leases. LeBlanc Nissan
offers flexible rates, terms and payments, so that you
can obtain the loan or lease that fits you
best.
The
rate in your individual financing package is influenced
by a number of factors, including your credit history,
the term of your loan or lease, the amount financed, and
the residual value of the vehicle you lease. Financing
through LeBlanc Nissan lets you enjoy a quick, competitive and
straightforward way for you to get your new car or
truck.
Do I need a co-signer?
Not
necessarily. If your application requires a co-signer,
your LeBlanc Nissan will let you know.
How would you like me to pay my down
payment?
You can use a credit card, money order,
bank check, cashier's check (made out to LeBlanc Nissan), or
cash.
Can I finance taxes, registration fees, and
other transaction expenses?
Yes.
Can I include the cost of other products,
such as extended service contracts, credit insurance and
add-ons in the amount that I finance or
lease?
Yes, again. If you are interested in one
of our products and would like to include its cost in
your finance option, just ask one of our finance
representatives to arrange that for
you.
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What is a lease?
When you lease, a
bank, credit union, or other financial institution takes
responsibility for the purchase and ownership of the
vehicle you choose. You then make a monthly payment to
that financial institution (the lessor) in return for
the right to use that vehicle for a specified
period.
Although you're not the record owner, i.e. the
title-holder, of your vehicle when you lease, you get
the opportunity to enjoy it for the term of the lease.
Oftentimes, leasing gives you the freedom to drive a
more expensive vehicle and have lower monthly payments
than if you bought it. In addition, you don't have to
worry about selling your car when the lease
expires.
By
leasing through LeBlanc Nissan, you can arrange for a mileage
allowance that's just right for you, so you don't have
to pay for any more vehicle than you need to.
Competitive rates and flexible terms are
available.
How does a lease work?
Your monthly
lease payment entitles you to use your vehicle for one
month, and you choose in advance the number of months
you'll be driving that vehicle. The monthly payment is
determined based on the cost of the money factor and the
amount of depreciation that will occur during the term
of the lease. Many things affect depreciation, including
the term of the lease, the number of miles you drive and
the car's condition at the end of the lease.
While the lease is in effect, the vehicle is
effectively yours. You have the responsibility to insure
it, and the right to enjoy it within the limits that
you've agreed to. Your vehicle must be returned to the
lease owner in good condition when the lease expires. If
you return it with more miles on it than your agreement
allows, you will pay a service charge of $0.15 per mile.
If the vehicle has excessive wear and tear, you could be
responsible for that, too. (There is insurance available
to cover this.)
If
you decide you want to keep your vehicle when the lease
expires, you can purchase it.
I'm looking at a lease agreement, and there
are a lot of terms that I don't
recognize...
Since leasing is legally different
from buying or financing, it involves slightly different
terminology, although the concepts are quite similar.
The most important concepts are "adjusted capitalized
cost," "residual value" and "money factor."
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Adjusted capitalized cost
represents the
actual purchase price of your vehicle.
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This is determined by the vehicle's purchase
price (capitalized cost), plus any applicable
charges and fees (acquisition fees, taxes, etc.),
minus any capitalized cost reductions (down
payments, trade-in allowances, and any other
applicable discounts).
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Residual value
represents the expected value
of your vehicle to the lease owner at the end of the
lease.
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It may vary depending on several factors,
including;
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The rate at which your vehicle is expected
to depreciate
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The length of your lease
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The number of miles accounted for in your
lease agreement.
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The
money factor effectively acts as an
interest rate, and reflects the cost of the money
"borrowed on your behalf" at the beginning of your
lease.
Once I take delivery, is leasing any
different from owning?
The day-to-day experience
of driving a leased vehicle is virtually the same as if
you financed it. The only major differences are that
leasing does restrict the degree to which you can
customize your vehicle, restricts "free mileage" to the
amount agreed at the beginning and you need to keep it
well maintained.
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What is the capitalized cost?
The
capitalized cost is LeBlanc Nissan's price of your
vehicle.
What is an adjusted capitalized
cost?
The
adjusted capitalized cost
represents
the real cost of your vehicle to the lease owner when
you take delivery. It is the price of your vehicle, plus
any charges that you choose to have financed rather than
pay up front (like taxes, acquisition fees, warranties
and insurance), minus any capitalized cost reductions
(like down payments).
Then, what is a capitalized cost
reduction?
The
capitalized cost reduction
includes any fees you decided to pay in full up front,
such as the amount of your down payment, license, tax
and registration.
If I lower my adjusted capitalized cost, are
my payments lower too?
Generally, yes. On any
given vehicle, the more money you initially put down,
the less you'll have to pay each month.
If
your primary concern is to minimize your monthly
payment, you can increase your capitalized cost
reduction (by increasing the down payment, or by paying
your taxes, fees, etc., up front). You may want to keep
the amount due at lease signing as low as possible,
though, so you can use that money elsewhere.
Are there any other factors that will affect
my lease payments?
Yes. The second major factor
that determines your lease payment is your vehicle's
residual value at the end of the lease. It is possible
for two vehicles to have the same adjusted capitalized
cost, but for one vehicle's payments to be lower because
it holds its value for a longer period. To put it
another way, sometimes a more expensive car that holds
its value longer, costs no more to lease than a less
expensive car. Which is why we say that leasing is an
easy way to get more car for your money.
How is the residual value
determined?
Financial institutions set residual
values based on their own experience and standard
industry guides. The most commonly-used are those
published in the American Lease Guide (ALG).
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What is a loan?
When you obtain a loan
for a vehicle, a lender such as a bank, credit union, or
other financial institution advances the money needed to
buy the vehicle after considering your trade in or down
payment. You make monthly payments to repay that loan in
full over an agreed period of time.
How does a loan work?
The amount that
you borrow, and the remaining balance during the life of
the loan, is called the
"principal." The principal can
be paid off at any time prior to maturity, but as long
as it is outstanding, it will incur interest which is
included in your monthly payment.
Until the loan is paid-in-full, the lender holds
the title to your vehicle as security for the loan. When
you pay off the loan, the title is sent to you, the car
is yours and you owe no further payments.
The
advantage to getting a loan for your car is that you can
do whatever you want with it. This means you can paint
it, raise it, lower it, pinstripe it, make it hop, put
in a new stereo, fix the dings and dents or not, sell
it, or drive it forever - as long as you've made your
loan payments. However, as with any car loan, if you
fail to make your payments, the financial institution
could repossess your car.
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