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SHOPSMART AUTOS – CUSTOMER INFORMATION – MAY 22, 2021 (Part 1)

Written by admin on . Posted in Audi, Car Specials, Chevrolet, Dodge, Electric Vehicles, Honda, Hyundai, Mercedes-Benz, Nissan, SUV


What Lease Incentives Exist?
Several car buying incentives also are offered on car leases. Some are easier to qualify for than others, but there’s typically at least one you can take advantage of and save some money on your next car lease. Below are some of the most commonly offered car lease incentives.
Cash Back
This is likely the most well-known car lease incentive – you’ve likely seen cash back deals advertised in commercials or on billboards. These incentives usually are applied to vehicles that aren’t selling as well as the manufacturer would like. One of the best things about cash-back incentives is that you automatically qualify. All you have to do is sign a lease before a date specified by the manufacturer, and you get a discount on the vehicle. It’s that simple. Cash back incentives typically range between $500 and $5,000. Despite the name “cash back,” you don’t actually get any cash back; the incentive is applied as a discount off the purchase price. One other thing to look into if you’re trying to capitalize on a cash back incentive: most states tax the full price of the vehicle before the cash back incentive is applied, but there are some states that don’t tax cash back incentives.
These are the states that currently do not tax car incentives and rebates:
  • Alaska
  • Arizona
  • Delaware
  • Iowa
  • Kentucky
  • Louisiana
  • Massachusetts
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • New Hampshire
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Rhode Island
  • Texas
  • Utah
  • Vermont
  • Wyoming

Conquest Cash
These incentives are offered by manufacturers and are heavily targeted at consumers who are loyal to a particular brand. The goal is to draw customers away from their preferred car brand and get them to lease a different brand. It works like this: a car brand targeted at luxury car lessees may offer an exclusive cash incentive to consumers leasing other luxury car brands to switch to their brand. Conquest cash incentives typically range between $500 and $2,000. These incentives are especially prevalent in car leasing because many lessees stick to a particular brand, knowing they can easily get the newest model of their existing vehicle once the lease ends. But someone who’s on the fence about switching to another brand may be willing to if they can get a good enough deal.
Loyalty Programs
The opposite of conquest cash incentives is loyalty programs. These incentives are used by manufacturers to hold on to their existing customers; they’re offered exclusively to people already driving the brand offering the incentive. For example, if you’re already leasing a car and you’re thinking about upgrading to the newest model of that same car when your existing lease runs out, you may be eligible for a loyalty incentive. Conquest incentives are usually worth $500 or more.
Subsidized Leases
These incentives can work a few different ways, but the result is always the same: a reduced monthly payment. One way this incentive is offered is when a car manufacturer sells a particular model to a leasing company at a reduced price, allowing the lessor to offer lower monthly payments. Leasing companies are also able to reduce a vehicle’s monthly payment by offering a subsidized interest rate, which – in the case of leasing – is known as the money factor. Lastly, leasing companies can increase a vehicle’s predicted residual value. By raising how the much the car is expected to be worth at the end of the lease – which decreases the difference between the cost of the car at the start of the lease and the end of the lease – the monthly payment is reduced. Head here to learn more about how car lease payments work, including how to convert the money factor to an annual percentage rate (APR).
What Are Your Options When Your Car Lease Ends?


Aquestion many people ask themselves before committing to a car lease is what happens once the lease ends. You essentially have four options:
  • Renew – or extend – the lease
  • Return the car
  • Purchase the car
  • Trade the car
What you decide to do is determined by a variety of factors, but it will ultimately depend on what makes the most sense financially.
Find Out if You Have a Closed-end or Open-end Car Lease
You should already know whether you have a closed-end or open-end lease, but just in case you signed the dotted line without knowing, it’s something you can easily find out. Determining which type of lease you signed mostly comes down to whether you use your car as a personal or business asset. If your car is only for personal use, you likely have a closed-end lease. But if you use your car for business purposes, you likely have an open-end lease. If you’re still unsure which type of lease you signed, find out if you’re restricted to a specific annual mileage limit. If that’s the case, you have a closed-end lease. If you did not agree to any mileage restrictions, you have an open-end lease. The reason it’s important to know which type of car lease you signed is because it dictates what you’re responsible for paying when your lease ends. And if you know which type of lease you signed, you’ll have a better idea of what costs to expect – if any. In a closed-end lease, you’re not responsible for the depreciation of the vehicle. But in an open-end lease, you’re responsible for covering any negative equity the car accumulates. To learn more about the difference between closed-end and open-end car leases, check out our blog post on why business car leasing makes dollars and sense.

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