Leasing to Play

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Auto leasing hit historic highs in the past couple of years and now finances about 27% of new-car sales.

Leasing is particularly popular with the luxury brands — 75% to 80% of new Mercedes-Benzes and about 50% of new BMWs are leased.

And specialty collector-car leasing companies such as Putnam Leasing and Premier Financial Services have become major players in financing collector-car transactions. J.J. Best Banc & Co., prominent in the field as well, offers traditional financing.

But leases in the collector-car market are quite different from those in the new-car market.

Different ends

Traditional, new-car leases are called “closed end” leases. You lease the car for a fixed period of time, say three or five years. There may be some up-front consideration, such as a down payment. At the end of the lease term, your lease obligation ends. You can just give the car back and walk away. Or, you can buy it for the pre-determined residual value, which was set at the beginning of the lease term.

John Draneas

SCM Columnist

John practices law in the Portland, OR, suburb of Lake Oswego, where he focuses on tax and estate planning, business organizations and transactions, and representation of collector-car owners. He is a past president of the Oregon region of the Porsche Club of America and served as the chairman of the PCA’s 2006 parade. His collection includes two Porsches, a Ferrari, an Alfa, a Lotus, a BMW daily driver, a John Deere tractor — and one increasingly famous Jaguar E-type. This month’s “You Write, We Read” on p. 20 is full of SCMer advice on whether Draneas should restore his Jag.

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