Car Leasing Company vs Dealership

Some people like to lease cars rather than purchase cars. A car lease is a contract between you and a leasing company where you agree to specific payment terms in exchange for using a vehicle. Once the terms of the lease have expired, you must forfeit the car back to the dealership. You do not get to take possession of the vehicle unless you’re involved in some lease-to-buy option.

If you’re someone who doesn’t do a lot of driving, then you can save money by leasing a vehicle and keeping your mileage low per year. But the question is, where is the best place to go to lease a car? Should you go to a car leasing company or a dealership? Let’s examine both.

Car Leasing Company

A car leasing company is not the one providing you with the vehicle. It is providing you with a lease so that you can get the vehicle from a car dealership. You can find your own car leasing company or use the one in which the lender provides. But like with auto lenders, the dealership will connect you with a leasing company which charges too much money. It is better to seek out your own leasing company and get a better deal on the monthly payments.

Car Dealership

The car dealership is the place where the physical car is given to you. The dealership itself is not the originator of the lease. They have their own car leasing company which manages the lease that you end up getting. It is like how they have their own car lenders when someone purchases a car. The dealership doesn’t give you the loan or lease. It is always another third-party company that they’re partnered with.

Of course, you have the choice to seek an outside leasing company. There is no law which states you must use the dealership’s leasing company. That is why contacting a leasing company is always the thing you should do first. However, even if you don’t go to a leasing company first, you can still negotiate the terms of the lease through the dealership.

After all, the dealership is a middle person in the arrangement, and they merely want to strike a deal anyway possible. So, tell them which terms you want, and they’ll fight to get them for you.

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The Leasing Process

You’re probably wondering how a car dealership can make money if the lease is coming from another company. What happens is that when you lease a car, the car dealership is actually selling their car to the leasing company that you signed a contract with. Then your monthly payments on the lease will go to the leasing company.

That is why, in many leasing arrangements, there is an option to purchase the vehicle. The leasing company doesn’t want to get stuck with a vehicle after your leasing terms have expired. So, they’re interested in selling the vehicle to you after you’re done leasing the vehicle. If you’re willing to purchase the vehicle, the leasing company will likely give you generous terms to encourage you to go through with the deal.

Otherwise, you’ll need to return the vehicle to the dealership. The leasing company may have a special arrangement with the lender where the company agrees to pay a commission to the dealership in exchange for leasing out their vehicle to more people. This is very common amongst used vehicles that are leased. It is beneficial for the customer to lease a used vehicle because they won’t need to pay as much money each month. The downside is they won’t get to experience the thrill of leasing a new vehicle.

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