Leasing alternatives for Chrysler buyers
guest column by Jason Lancaster of AccurateAutoAdvice.com
When Chrysler Financial recently decided to halt their leasing program, Jeep, Dodge, and Chrysler dealerships around the country uttered a collective sigh. Bank One and other independent lenders followed Chrysler Financial and dropped their own Chrysler leasing programs as well. Dealers, already struggling, said that Chrysler’s decision to halt leasing was going to hurt sales. After all, if lease customers can’t actually lease a new Jeep, Dodge, or Chrysler, won’t they be forced to go and lease something else?
Not necessarily. The truth is that leasing was declining in popularity in recent years, and for good reason. The alternatives to leasing are getting better every year. So, if you were interested in leasing a new Chrysler product and now you can’t, here are some solid alternatives available.
First of all, there are a large number of people that consider leasing because it offers them a way to drive a vehicle that they could not otherwise afford. If you are in this group, I’ve got great news for you. There has NEVER been a better time to buy a late-model used vehicle. You can find a one- or two-year-old version of the new Dodge, Jeep, or Chrysler you want for substantially less than a new vehicle. Even better, most of these late-model used cars are now certified by Chrysler. Certified used vehicles offer many of the same benefits as new vehicles – like warranties and special financing – but they cost substantially less than a new vehicle.
If you’re interested in leasing a new Chrysler for tax purposes, I’ve got some more good news for you. [NOTE: I’m no tax professional – please consult your accountant about tax questions before purchasing a vehicle.] Commercial TRAC leases are regaining popularity with business users for quite a few reasons. Basically, a TRAC lease is a “lease” in name only. The terms of the agreement are simple – you make lease payments for a pre-determined amount of time, then you agree to buy the vehicle at the end of the term. Since the leasing company has no intention of ever taking your vehicle back, they don’t care how many miles you use or what condition the vehicle is in. It’s just like buying a vehicle because you can do whatever you want with it. The difference is you get to write your expenses off each and every tax year.
Finally, if you lease because you’re the type of person that likes to have a new vehicle every few years, I’ve got some bad news for you. You’re wasting a lot of your hard-earned cash. No judgment – I’ve done it myself – but it’s time to break your “new car every two or three years” habit. While I won’t bore anyone with tedious math calculations, take my word for it: The financially responsible way to buy a vehicle is to spend no more than half of your annual salary, finance that amount for as short a time as possible (if you finance at all), and then drive the car you bought until the wheels fall off. In the long run, you’ll save thousands of dollars following this advice. It’s not as fun as leasing a new car every few years, but you’ll thank me when it’s time to retire.
My local Honda dealership is advertising a 2008 Honda Oddessy lease for $289.00 a month with $599.00 down for 27 months. My local Chrysler dealership is advertising a 2008 T&C Touring for $299 a month with $2000.00 down financed for 96 months. What do you think consumers are going to do??
I understand what you’re saying - that’s a huge difference. Still I think that Chrysler’s CPO program presents a better opportunity for customers. Hopefully people will follow my advice and go look at a certified 2007 T&C with 15k-20k miles. They can be found for less than $15k (I found one just now for $13.5k), and with no money down payments are about $300 a month for 60 months. Most people would rather own than lease I think, so this seems like a good alternative. Considering that leasing isn’t nearly as popular as it once was, I would say that many consumers would find my alternative more attractive than the Honda lease. What about you?
Unfortunately, I don’t think so. The mysticism around the Honda and Toyota name is still going to keep people away from used Chrysler/Dodge vans as well as buying new if they can’t lease. I’ve known people to by a Toyota Sierra for more $$ and less equipment then a new Chrysler van. They were afraid of the quality. It’s really sad actually.
I have a 2006 T&C van coming off of lease in Feb 09. Not sure what I am going to do. I am hearing the Chrysler financial may offer market value for the cars coming off of lease instead of the residual value (this came from a dealer). With some of the quality issues I have had I’m not so sure it is still enough for me to keep the van. I feel really bad for the dealers. It has to be embarrassing to advertise 96 month financing to get affordable payments for their products.
I’m hoping Chrysler gets their stuff together- I’m just afraid it’s too late.
Scott - I think that you’re right about some consumers being afraid to buy a Chrysler for a perceived lack of quality. However, if a person is already uncertain about buying a Chrysler vehicle, a good lease program probably won’t make much difference. As you said, people have paid more money for fewer features because those vehicles said “Honda” or “Toyota” on the hood. Go figure.
The dealers ARE in a tough spot and I feel for them. It wasn’t even 10 years ago that a new Jeep, Chrysler, or Dodge franchise was a good investment. Today, you find them for sale everywhere, sometimes for less than the value of the physical assets. It’s a dark time in the domestic auto industry, from the auto worker to the car salesman and everyone in between.
There are some qualified opinions out there that Chrysler will file for bankruptcy in the next 18 months. That would probably be the end of the company as we know it - not because of the bankruptcy, but because the average consumer would assume the worst as soon as the word “bankruptcy” was uttered. It’s doubtful that Chrysler could survive a 50% drop in sales (even if it was only for a little while) because of their cash-flow situation. Therefore, in my opinion (and it’s not going to be popular to express it here), you would be wise to get rid of any Chrysler product you own. If they do file for bankruptcy you don’t want to risk a total collapse in the value of the product.
Not to be negative - I think Chrysler, Dodge, and Jeep are great, reliable vehicles - there’s just a lot of uncertainty surrounding the company right now.
Bankruptcy is very unlikely because Cerberus knows as well as anyone that 2010 will mark a turning point, and all they have to do is get there. Cerberus can get there; they have very strong resources despite the GMAC debacle.
What about Loan Gaurentees? Jim Press was just talking about how they can take $21 billion in them.
Perhaps I’m being a little bit of a doomsayer in regards to a Chrysler bankruptcy, especially in light of recent government moves to bailout financial institutions. I retract my statement!