Leasing an Exotic from Start to Finish

Wilson Ng, Lease Account Manager, Pfaff Leasing  

As soon as you enter our building you most likely have an idea of what car you want. You might have found a car at a dealership that may not have leasing options available or maybe you found a car you want on Craigslist or Autotrader or perhaps you know what you want but just haven’t found it yet. Whatever the case may be, Pfaff Leasing is here to structure a payment method for you to acquire your dream car. Today we are going to be talking about our 6-step process of leasing an exotic car.

Step 1: Qualify the car first   

Before we proceed with a lease, we first qualify the car to ensure that the car that you found is the “right” car. We investigate your vehicle finding the year, make, model, accidents, service history, and much more. If your car passes all of our strict criteria then it is categorized into either high-line, main-line, classic/collectible line, or what we are talking about today; exotic-line.    

Step 2: Offer free consultation 

We offer consultation from a financial perspective and also offer general car knowledge. All of our sales staff are truly passionate about supercars and being around these cars frequently we can offer you genuine car advice. We like to consider ourselves car-guy financial planners. If asked, we offer a neutral opinion where we are not attached to any dealership or brand. We also educate on the benefits of leasing exotics 

British Columbia Luxury Tax 

On April 1, 2018, B.C.’s NDP government raised the provincial sales tax from 10% to 20% on vehicles $150,000 and over. There’s also the 5% federal GST which is added after the 20% which results in an effective rate of 26% bringing the total tax burden on a $150,000 car to $39,000. Leasing a vehicle allows you to pay tax only on the portion of the vehicle that you use. 

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Step 3: Qualify the customer & structure lease 

Before we structure any lease, we ensure that leasing is the best acquisition method given your needs and wants. Once we are confident, we start to structure the lease and talk further logistics such as how long the customer would like to lease for (12,24,36 months) and how much they would like to put down (normally between 20-25%) depending on credit rating. 

Step 4: Setting the residual 

One of the most important aspects of structuring your lease is setting the residual. Pfaff Leasing prefers to structure your lease on the conservative side meaning we set our residuals based on wholesale not on retail prices. By structuring the lease in this way, you indirectly save money.   

We structure our leases this way for 3 reasons: 

  1. Setting a residual too high or close to the market value creates a potential risk for the customer that they may end in a negative equity position 
  2. Most of the time the car is worth more than what the customer owes (positive equity) at lease end which means monthly payments have contributed to building equity 
  3. It idifficult to predict the future value of exotic cars given they fluctuate based upon market demand for certain makes and models.  Also, what if a customer gets into an accident which devalues the car? 

Example:  

We structured a 3-year lease for one of our customers for his luxury vehicle. This customer got into an accident that wasn’t his fault. His car was parked outside of Starbucks and got hit from behind. The customer went through an insurance claim to get the car fixed; however, the car now had a $15,000 insurance claim on its history. At the end of the lease, the customer opted to buy out the vehicle for $40,000 and was still able to sell it for $65,000 which meant a profit of $25,000 thanks to a conservative residual.   

Step 5: Follow up 

We follow up with you on an annual basis to ensure that you are 100% happy with your purchase. As the lease approaches its’ maturity, we begin to follow up with you to make sure the you start planning for the future. 

Step 6: Customer returns vehicle 

As mentioned in step 4, in most cases you have positive equity at the end of your lease with Pfaff Leasing which you can use towards your next vehicle purchase. You basically have four options at the end of your lease.   

The 4 options are: 

  1. Buy out the vehicle 
  2. Return vehicle  
  3. Upgrade the vehicle  
  4. Extend the lease 

Conclusion 

At Pfaff, one of our biggest advantages over our competitors is our human touch. At other leasing companies, you’re treated like just a number. Leasing a vehicle, even a supercar, can be very systematic and dry but at Pfaff Leasing we offer very personalized service and truly enjoy the process of helping you obtain that childhood poster car. 

Click here to find our contact information or speak with a representative.