Manatrey, Matt Assignment Topic

AMGT 301-001
October 12, 2019
Assignment & 1969

Introduction

Should I lease, or should I finance? This is one of the most common questions that

salesman at dealerships get asked. What is better in the short term? What is better down the

road long term? There are a lot of questions to ask yourself when making this decision. This

paper was written to make the decision that much easier. For this project, I interviewed Kevin

Notter, the Sales Manager at MINI of Orland Park Illinois. I have come to know Kevin through

the MINI Club I run in Northwest Indiana. The closest MINI dealer to Northwest Indiana is

Orland Park MINI. I have known Kevin since he was just the lone salesman for MINI’s at the

dealer that was never supposed to become a MINI Dealer. It was built as a BMW Dealer and

shortly after it was complete, the MINI Showroom was added. This dealer serves the South

Chicagoland Area and as well as Northwest Indiana in buying and servicing all MINI’s. Kevin over

the years has become a personal friend as well as an adviser to my automotive endevours. This

paper will go over the different types of car buying, the pros and cons, and which one is right

for you.

Unfortunately, with times like this, I could not obtain the necessary documents for this

project due to the COVID-19 pandemic. Therefore, for this project, I am relying on Internet

sources on my research into this. Luckily, there is a lot of internet websites that have

information on which type of car buying is best for the person. I believe that the Internet
sources I have used will fulfill the requirements for this paper. The car I have “chosen” to lease

is a 2020 MINI Countryman S ALL4 John Cooper Works.

Leasing

There are a lot of people who will tell you to lease a car before you buy one. Sometimes

they are right. When interviewing Kevin, He said that “If you like a new car every 2-3 years,

leasing is the way to go.” That is just one of the pros to leasing versus buying a new car, is that

you just turn it in at the end of your lease and get a new vehicle, weather it is from that dealer,

brand, or otherwise. Its basically an extended rental car that you own and register in your

name. It is a great way to see what is out there and have the latest in terms of technology and

innovations in the car world since you upgrade every 2-3 years.

According to Edmunds.com, the average American drives more than 12,000 miles a

year, up from 10,000 just a few years ago. People are traveling a lot more than they have

before and it shows, although due to the recent world events surrounding COVID-19, that

number may fall here over the next few years. Leasing puts a mileage restriction on your

driving in those 2 to 3 years that you lease the car. A lot of people see the 10,000 mile a year

deals on car TV commercials, but unfortunately, most of the time, you need to have a higher

mileage lease for it to make more sense. For the Countryman, Kevin recommends 13-15,000

miles a year for leases, 15 if you drive a lot. A good thing to do is to calculate the number of

miles a year before you decide to lease to decide which mileage option fits for you.

Another thing about Leasing is the fact that you have to keep the car in tip top shape, no

tears, scratches, or any imperfections must be on the car when you go to turn it in. This can be
difficult for some with children or with people who do not have access to a garage where they

live. Overall, it is always something you have to look out for when leasing a vehicle.

The final drawback of a lease versus a financed car, is that you never really “own” the

vehicle. This for some people is a good thing, but can also be a bad thing as well. It depends on

how you look at it. Almost all cars depreciate from the time you purchase it, but if your car

appreciated in value, which is very rare, It would be a better option to buy versus lease since

you are going to be able to have the full amount the car is worth. You can also buy out your

lease at the end of the term of the lease. This is done at the dealers discression, but if you liked

a car that much when you leased it, you may be interested in a program like this. Almost all car

companies have something like this.

Now onto the good side of leasing and I will start out with the big one, free

maintenance. Most leases do not go over the allotted mileage for the factory warranty, so most

repairs are of no cost to the owner with most OEM’s, MINI is included in this program, so if you

have a 30,000 mile lease, then you never have to purchase an oil change or pay for parts or

service during the duration of the lease. Another perk is that all service and maintenance is

performed at the dealer with factory trained technicians, and also most dealers offer loaner

rentals that you can take out during the duration of your service. So you never have to worry

when something is broken or needs to be fixed, since it is free to the customer.

Another good thing about leasing is the payment, usually a lease payment can be almost

40% less than a traditional car payment, making it financially stable in the long run. Some

manufacturers will also let you lease some Certified Pre-Owned cars and some former Dealer

Loaners as well.
 The final topic that is pro-leasing is that you don’t keep the car. While I said this may be

a bad thing, with some cars such as BMW’s and MINI’s, with the high cost of repair and the high

cost of parts, it may make more sense to lease on some brands versus other’s, Honda would be

a brand I would finance personally since they have been proven to be reliable long term, but in

terms of leasing, I would have people lease the MINI’s and BMW’s that are on the road since

they are not usually the most reliable vehicles on the road. Another strategy is to lease the last

model year of a car before it has a new generation and do your research to make sure there are

no big problems that it has with the outgoing generation.

Financing

To start, financing a car can be good as long as you have done research on it and seen

what some issues are. The first drawback to financing is that the payments are quite high per

month, since you are buying it to own it, you usually have a higher monthly payment that is due

each month. I have personally seen some car payments be over $1000 per month! Along with

the payment, some terms of the payments are absolutely outrageous, the new normal for car

payments in 2019 was a whopping 72, 84, or 96 monthly payments! For a car, that is

outrageous, and I think that it should be max 48 months for financing a vehicle.

The second drawback is that you own the car, and if the car is a basket case and is not

the reliable car that you were promised when you bought it, it could turn into financial ruin for

you, putting money into a car that is losing value almost every day of its life.

Going on the losing value aspect, the final topic that makes financing a car a mistake is

that the car is depreciating almost every day that you own it. Very rarely does a car appreciate
in value and if it does, then the value of the car makes it desirable to finance versus leasing a

car. This rarely happens, so most of the time you are eating the value of the car when you make

your monthly payment on it.

In contrast, when you are finished paying the financing on your car, you own your car,

and you can keep it as long as you like, no matter if it is a lemon or not, you have that equity

that was in the car, It is not as much as you paid for it, but it is at least something.

So.. Which is better?

The short answer to which is better for me, leasing or financing, is completely up to the

customer. For some people, leasing may be the better option, but for other people, financing is

the winner.

Some examples that may warrant Leasing to be the better option are People who have

average or lower credit scores, people who are on a fixed income, or people that are also

currently paying off another car loan, or if you are upside down or “under water” on a current

car loan. Leasing is the option for these people.

Some people that may benefit from financing include, middle or high class citizens for

income, car enthusiasts, good credit scores and also people who have children due to some of

the behaviors that children can do in a car. You must also be able to pay for all repairs for the

vehicle when it is broken. It really all depends on who the individual is, you just cant see from

their face. Dealers can use the FICO credit score to judge what option is best for the customer

and get them in the right direction.

Conclusion
 As you could see, there are a lot of pros and cons to leasing versus financing a vehicle,

and it all boils down a lot of different factors, such as income and most importantly your FICO

credit score. When interviewing Kevin, he said to start early with building your credit. Your

credit score can do much more than get you into a low interest loan for a vehicle, it can buy a

house, buy toys, and even sometimes determine if you get a job or not! It is an important piece

of information that you should monitor frequently and be able to always keep it at the “good”

level. If you were to ask me if I prefer lease or finance, I would say it depends on the car. If you

are like me and like to have the latest tech, I would think the lease would be the better option,

but if I was an enthusiast of this car, I would probably want to finance due to me wanting to

keep it as a heirloom and being able to modify it when needed. It depends on the car and the

dealership and OEM terms as well. In addition to this narrative, There is a simple calculator that

is used to be able to see which one of the options are good for you. You can use it to see if it is

the right fit for you. Go out and buy (or lease!) the car of your dreams!
 Reference:

Notter, Kevin, Personal Interview (phone). Sales Manager, MINI of Orland Park, Orland Park IL,
March 20, 2020.

Consumer Reports. “Leasing vs. Buying a New Car.” Consumer Reports. Accessed April 4, 2020.
https://www.consumerreports.org/buying-a-car/leasing-vs-buying-a-new-car/.

Vincent, John M. “Buying vs. Leasing a Car.” U.S. News & World Report. U.S. News & World
Report, February 6, 2020. https://cars.usnews.com/cars-trucks/buying-vs-leasing.

Montoya, Ronald. “Should You Lease or Buy Your Car?” Edmunds, April 19, 2017.
https://www.edmunds.com/car-leasing/should-you-lease-or-buy-your-car.html.

“Financing or Leasing a Car.” Consumer Information, September 23, 2019.

https://www.consumer.ftc.gov/articles/0056-financing-or-leasing-car.
Excel Snapshot
 Thank You Letter

708 Campus Dr.

Big Rapids MI, 49307

March 21, 2020

Kevin Notter
Sales Manager
Zeigler BMW/MINI of Orland Pak
11030 W. 159th St.
Orland Park IL, 60467

Hello:

Thank you for taking time out of your busy schedule to speak with me about my term project
topic, the information you provided will be of great value as I write and assemble my paper. I
think that your expertise of the subject will make my project stand out from other projects in
my class.

I will be submitting a written paper at the end of March and presenting my research to my
peers in the next few weeks.

Once again, thank you for your time. If you think of anything else that would add to my topic,
you may reach me at 219-252-0054 or manatrm@ferris.edu

Best regards,

Matt Manatrey