Reduced inventories and the increased cost of new and used vehicles has caused dealers to extend financing terms to 72, 84 and even 96 months. This effectively takes a customer out of the market for five to seven years. Vehicles depreciate at a much faster rate than principle can be paid down on these extended terms, creating negative equity for the consumer.
For consumers to trade early they must produce large down payments or, if possible, roll this negative equity into another vehicle. The industry needs more short-term finance options, so the current situation doesn’t negatively impact the future of auto sales.
Shortened Trade Cycles and Increased Customer Loyalty
According to DRIVRZ Financial, used leasing allows for lower payments on shorter terms with guaranteed residual values. Most of the company’s customers are in an equitable position six months to a year prior to lease end. This not only brings a customer back to the dealership sooner, but the dealer also has an opportunity to purchase their used vehicle.
“With shortened trade cycles our program brings more vehicles back to the selling dealer,” Craig Vaughn, president of DRIVRZ Financial said. “Our lease end process directs customers to the originating dealer, thus giving that dealer the first right to purchase the vehicle and assist their customer with their next vehicle.”
More Financing Options to Meet Your Customer’s Individual Needs
“Our program allows customers to finance greater amounts to compensate for the increased used car prices,” Vaughn continued. “At DRIVRZ Financial, we advance up to 120% of MSRP or ‘Clean Retail’ book value. This allows dealers to get customers lower payments with less down payment and the guaranteed residual insulates the consumer from negative equity at lease end when vehicle prices normalize.”
Used Vehicle Leasing Is Not Just For Prime And Super Prime Customers Anymore
“At DRIVRZ Financial, we recognize the need to be a full spectrum lender. We have seven credit tiers and will buy down to a 550 FICO. Our program offers a front-end advance of 100% of MSRP or ‘Clean Retail’ book value for someone with a 550 FICO. This type of advance is unique for this FICO range and sets DRIVRZ Financial apart from the competition. With the higher advance, our lower tier customers are not faced with the large down payments required by other lenders just to get an approval,” Vaughn said.
How Does Drivrz Financial Compare to other Leasing Companies Available Today?
“Our goal is not to compete with OEM or captive programs with incentivized rates or residuals but rather to provide an alternative financing solution. The OEMs and captives do not provide a used car leasing solution anywhere near as comprehensive as DRIVRZ Financial. Our used vehicle leasing platform is a great solution for CPO vehicles from all manufacturers. We also lease vehicles from current back to five model years with up to 75,000 miles at inception. These options have not been available in the past.”
Dealers Want and Need Partners That Deliver Higher Profits
“At DRIVRZ Financial, we offer front end advances up to 120% of MSRP or ‘Clean Retail’ book value,” Vaughn said. This allows for larger profits and or less down payment from the customer.
Another key benefit of the program is the “back end” income opportunity available. Dealers realize, on average, $2,364 in rate participation on leases with DRIVRZ Financial.
“We also advance the greater of $4,500 or 15% of adjusted capitalized cost up to $9,500 across all tiers. Unlike subvented OEM or captive program, which may or may not pay a marginal ‘flat fee’ we believe the ‘back end’ income opportunity is vital to the success of our dealers and our program. These front and back advances differentiate DRIVRZ Financial from the competition.
“We take a very dealer centric approach to the business in all departments at DRIVRZ Financial and are continuously looking for innovative ways to bring more value to our dealer partners,” Vaughn concluded.