Automotive finance and leasing are the most complex and sophisticated elements of the car business. If you’re a consumer with good credit and auto finance or lease experience, this may not matter to you very much. Consumers have learned that vehicle prices are negotiable, service and parts are too, insurance companies compete for one’s business, and finally, financing is negotiable too. But how?
About a decade ago the President of Oregon Roads took a call from the Attorney General’s office. It seems that a southern Oregon Mercedes dealer was advertising a car, an expensive, new car, for only $199/mo. It looked too good to be true so the AG’s office was asking for help deciphering the small print. How can a Mercedes cost only $199/mo?
First, it was a lease, not a purchase. Leasing generally offers payments 30% less than financing, because the lessee is only paying depreciation, not principle. The lessee doesn’t own the car at the end. The car, coincidentally, is worth that 30% difference. But a Mercedes for only $199?
Secondly, there was a 10,000 mile limit. Most consumer lease advertising is required to mention that limit, but it’s usually disclosed as miles per year, not total miles during the course of the lease. Nobody drives a car only 10,000 miles over 3, 4 or 5 years. If they did, a lease would not be an appropriate option anyway. And finally, there was a huge down payment in the fine print. With all our experience in the car business, we know that any car can result in any payment. Large down payments and long terms will result in lower payments. But mortgages have 30 year terms because houses are durable. Unlike homes, cars wear out and diminish in value so very long terms are just irresponsible lending, burying consumers in their cars for long periods of discontent.
We could advertise any car for $99/month, and in the fine print disclose the very long term and huge down payment necessary to reverse engineer that payment. Advertising is designed to create traffic on dealer lots, not deliver discounted cars at advertised prices!
Consumers benefit by sharing their budget with an Oregon Roads staff member. We take a balanced approach to determine both of these concerns: how much might you qualify for in terms of price and payment, and what are you comfortable spending. Both analysis and feelings are important to consumers and we understand that.
We represent our clients in negotiations with lenders. They know we will place our contract with the underwriter who offers the lowest rate, is flexible about the term, requires a reasonable down payment (if any), and the lender who is willing to accommodate our client’s needs.
Imagine our marketplace. Dealers routinely sell premium after-market products and inflate prices and payments. The result is delinquency and default. Our lenders monitor the performance of our loans and rate us as their highest quality dealer because of the outstanding performance of our good credit customers. That’s why Oregon Roads offers the lowest rates in the Pacific Northwest.