TL;DR
Leasing and lease-to-own make it easier to generate long-term income from a car. Rather than selling at full retail price and handing over the title, you keep the title and collect payments every month until the customer buys the vehicle outright.
Leasing Isn’t Just for the New-Car Franchise Down the Road
Most people assume leasing is only for big new-car dealerships with glass showrooms. But more and more customers are searching for “used car leasing near me,” looking for affordable monthly payments they can get approved for.
This is where independent dealers with leasing options can stand out. Many used-car buyers want access to more affordable vehicles, with the chance to eventually own them outright instead of handing them back after 3 to 5 years.
How Lease-to-Own Works
At Northland Auto Solutions in Burnsville, Minnesota, we built the original Lease’T’Own® model back in 1990. Our goal was to give customers a way to pay for and use a car at the same time, with the option to purchase it or return it at any point during the lease without penalty.
The concept is straightforward. The dealer remains the titled owner of the vehicle for the term of the lease. During that time, the customer makes regular monthly payments, supporting dealer income. At any point, they can buy the car outright or return it if their financial circumstances change and payments become difficult.
We like this setup because it reduces the risk of customers ducking your calls. Instead of feeling like they have to pay no matter what, they know they can simply return the vehicle, and you can lease it to another customer.
This also means you can lease the same vehicle more than once. Over time, a single car can earn more than its used resale value if it’s returned and leased again.
The Dealer’s Upside
The upside for dealers is significant. Recurring monthly income is the main benefit, but many dealers also see more profit per unit than with conventional retail or wholesale.
Your risk drops too. By keeping the title, you stay in control of your vehicles, and you’re far less exposed to costly repossessions and customer bankruptcies.
The vehicle only passes to the customer once they’ve paid in full, so you’re not carrying a loan on their behalf.
Getting Set Up
Lease’T’Own is a turnkey car leasing business. All you need to do is add cars. We supply everything else, including a Reg M-compliant closed-end lease agreement, $1 million in excess contingent liability insurance, and GPS tracking units. Our team also provides hands-on training so you understand how to get the most from this business model.
Cash flow can be a challenge with any leasing model, but LTO® Financial makes it simpler. LTO® Financial can purchase qualified vehicles and their lease contracts from you in groups of three or more, freeing up cash so you can keep building your inventory.
The Lease’T’Own® program is available in 46 states. It is not available in Connecticut, Illinois, Iowa, New York, or Wisconsin.
Real Results
Dealers have seen strong results with lease-to-own. One dealer reported more than $5,000 a month in payments within six months of starting the program. Individual results vary.
FAQs
What is lease-to-own for used cars?
Lease-to-own is a payment model that lets customers make monthly payments on a vehicle, with the option to buy it outright or return it.
How is a leasing program different from financing?
With financing, you sell the vehicle and the customer owes a debt to the lender. With leasing, ownership doesn’t transfer until the purchase is complete. Instead, customers pay you monthly to use the vehicle, with the option to buy it outright.
What kind of vehicles qualify for Lease’T’Own?
Standard inventory vehicles are compatible with the program. Each one needs a Northland GPS device and contingent liability coverage.
How does Northland support a dealer’s setup?
Northland supports dealers with team training, insurance, GPS tracking, and funding through LTO® Financial.
Is lease-to-own profitable on older, higher-mileage vehicles?
Lease-to-own is often more profitable on older, higher-mileage vehicles. They cost less to acquire, and a returned car can be leased again to keep generating income.
Add High-Margin Leasing to Your Dealership
Talk to Northland Auto Solutions about your options at 800-879-3433, or contact us online to learn how lease-to-own could benefit your dealership.