Much like the customers walking through the showroom wondering what the better choice is, dealers have also been asking themselves an age-old question: leasing or financing? Both options offer dealers unique advantages, but which one comes out on top? Let’s break down the pros of each and see how they stack up.
Leasing: Keep the Wheels Turning Faster
Shorter Trade-in Cycles Leasing means customers will be back at your dealership sooner. Why? Lease terms typically last 24-48 months, which means more frequent trade-ins and return visits. That’s more chances to build loyalty and keep customers satisfied as they look for their next ride.
Increased Customer Flexibility Got a customer who’s looking for a high-end model but needs to stick to a budget? Leasing could be your best friend. With lower monthly payments, it’s easier for customers to afford premium models and higher trim packages. Who wouldn’t want more car for less money?
Future Revenue Opportunities Leasing doesn’t just mean one sale; it opens the door to future deals. There are opportunities for early lease terminations, vehicle upgrades, and even selling the leased car to the customer when the term ends. Plus, remarketing that returned vehicle as a certified pre-owned can attract another group of buyers!
Easier Inventory ManagementLeasing helps dealerships stay ahead of the game by keeping inventory fresh. As lease vehicles return, you’ve got the latest models on the lot while offering pre-owned options, giving you a steady flow of inventory and something new to attract every kind of buyer.
Financing: Building Long-Term Bonds
Higher Profit MarginsFinancing often leads to a bigger payday. When customers finance, they typically take on the full cost of the vehicle, which could result in higher commissions for the dealership. Not to mention, there are opportunities to partner with lenders for additional profits.
Long-Term Customer RelationshipsFinancing means a longer relationship. Since loans can last up to 84 months, customers are more likely to keep coming back for maintenance and service throughout the life of their loan. And let’s not forget the potential for early trade-ins—another chance to make a sale!
Simplicity and FamiliarityFinancing is easy to explain and comfortable for many customers. It’s the tried-and-true option for those who want to own their car and build equity. The idea of “this is mine” can be a strong selling point for a lot of people.
So, What’s Better
The truth is, there’s no one-size-fits-all answer. Leasing and financing both offer unique advantages to dealerships. Leasing keeps inventory fresh and drives repeat visits, while financing has the potential to build long-term relationships and higher profit margins.
The best part? Autovance allows you to easily build both lease and finance deals in seconds, so you can offer the perfect option to each customer, whether they want the latest model every few years or prefer to drive something that is all their own.
