Why Dealers Like Leases

Some automotive consumers believe that car dealers prefer to have customers lease because he makes more money on leases than loans.

That can actually be true if the customer is uninformed about leasing and the dealer is able to manipulate the lease deal to his advantage. However, if the customer understands leasing and how it works, there is no fundamental reason that a dealer makes more money.

The real reason that car dealers like leases is that it gets the customer back in the store sooner than with loans -- customer retention. In a ten year period, a dealer may only sell one or two cars to a returning loan customer, while he may sell three or four to lease customers. Since lease customers must return their vehicles at lease-end to the dealer, he has more opportunity to get additional business from them. Customer retention rates as high as 80% are common for leasing.