I was at the NIADA (National Independent Automobile Dealers Association) Annual Convention in Las Vegas in June where I noticed an increased attention to RTO (Rent-To-Own) and LTO (Lease To Own) as a model to provide transportation financing options.

One of the great advantages to the LTO model for consumers is the availability to flexible transportation. Most of the LTO contracts I have seen have are renewable which limits the consumers commitment. This means that the consumer can drive several different automobiles during the same term as the typical BHPH cycle. Of course, each time the consumer re-contracts a lease to own vehicle, they need an additional “down payment (actually a “Capitalized Cost Reduction”).

A great deal for the dealership is the ability to take the asset depreciation and in some states, the deferment of sales tax liability. While this may be a great option for some dealers, be careful! There are many ways to utilize RTO or Lease to Own in your sales/ financing model, however, there is only one way to do it right!

If you are interested in learning more about Automobile Lease-To-Own Programs, please contact L.J. Marhefka at L.J. King and Associates by email at LJ@LJKing.com.

Thanks,

L.J. Marhefka
L.J. King and Associates
email LJ@LJKing.com