How to Start a Lease to Own an Automobile Business
- 1). Obtain a location in an area that best serves your population. People who are in the market to lease to own a vehicle typically are on the lower end of the credit scale. Find a location that caters to this market. Areas with furniture rent-to-own stores and payday cash advances would be considered prime for this type of business.
- 2). Build your inventory. Quality used vehicles can be anywhere from 1 to 9 years old with 40,000 to 75,000 miles. In order to protect your profit margin, be a savvy shopper. Look for cars at area auctions, online and in classifieds.
- 3). Build a relationship with a licensed mechanic. This will come in handy, especially if you plan to offer warranties on your cars (some states require this). It will be most beneficial if you can purchase the cars for lease/rental, and your mechanic is willing to wait until you have secured a rental customer to receive payment.
- 4). Put measures in place to recover your assets if it becomes necessary. One major difference between a traditional buy-here pay-here car lot and a lease-to-own car lot is the vehicle's ownership. In a lease-to-own automobile business, the auto remains f the property of the owner for the duration of payments. The leaser only owns the vehicle once all payments are made. If customers decide to miss payments and not return the car it is then considered theft of property. Devices such as a GPS can be placed on the vehicle to keep track of it or a device can even be placed on the vehicle to block the vehicle from starting up due to non-payment.
- 5). Create a contract. Many lease-to-own customers enjoy the benefits that go along with this method of paying for transportation. Typically lease-to-own automobile businesses require lower down payments for vehicles, warranties on the operation of the car, and no tax at signing. In your contract, you will also want to factor in the cost of goods, maintenance, and profit margin, when determining the down payment and length of payments it will take for the customer to actually own the vehicle.
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