Padded Lease Rates! Ethical or Unethical,

Point - Counterpoint. Let me say first of all that I am the one for our company that would decide this and I choose not to pad the rates. I feel that leasing has enough advantages to the dealership without making more money on the transaction. That having been said, I also have no problem with dealerships that do. Does the dealership that pads also pay for shipping the equipment back? I'm just saying that sometimes a pad or mark-up is earmarked to cover an expense somewhere else. Some lease companies SPIFF the salesrep. Do you believe that money should also go to the customer? Regardless, the customer who leases, agrees to a monthly payment and what the dealership gets funded (or the SPIFF the rep gets) is really none of their business at that point.

Competitively, you don't know what rate I'm getting from the leasing company...even if you use the same company. For instance, our rate is higher than the example you use and for alot a very good reasons (no property tax, no insurance, no forced renewal, etc.) but not due to any "padding".

Let's look at the "extra" FMV. We would be looking at somewhere in the facinity $60 to $100 yet most reps are more than willing to subject their customers to a contract that makes them pay the lease company's property tax every year, put them at risk of forced renewals, charges a penalty for early pay-off or worse yet won't allow an early pay-off at all.

The worst thing you can do is make the customer pay elevated rates and have them sign a bad contract but I would suggest that you need to improve the contract first.

As a rep who can decide to do business with several leasing companies, I don't just shop the rates between leases. Each company has their advantages and disadvantages and the price/value equation is simple to determine. I know we have dealt with the Wells Fargos in the past and know better than to allow our customers to enter into those agreements. My best advice for reps, new or old, would be to get to know your financing options. The worst you can do is to miscommunicate equipment financing, how it is calculated, or not be able to explain the benefits of leasing vs. buying. If your new, find examples of good leasing experiences (the accounts that have consistently renewed leases with your company) vs. the examples of bad leasing experiences (the "I'll never lease a piece of equipment again") and understand what happened from the customer's perspective. GO TALK TO THEM AND ASK "Why?" and "Why not?"

If your tenured, I would hope you already know this and don't have any gripes with leasing companies. It is part of business, simple to understand, and should be very low on the "reasons to buy" list.

Old Glory,

What company do you use that gives you the benefits you mentioned below?

quote:

Competitively, you don't know what rate I'm getting from the leasing company...even if you use the same company. For instance, our rate is higher than the example you use and for alot a very good reasons (no property tax, no insurance, no forced renewal, etc.) but not due to any "padding".

Clune Leasing
(800) 862-6633