• Small Change – Large Benefits
  You’ve leased new – Now lease used with Lease’T'Own®
• Community Image
  LTO® instantly makes you the Hero in the Community!  Capture customer other dealerships turned down!
• Close More Sales
  Put 40% – 60% of previous “Walk Offs” into a Lease’T'Own® vehicle
• Customer Satisfaction
  Develops strong customer loyalty resulting in very high repeat and referral business
• Limit Risk
  Contingent Liability / Comp & Collision Dealership Insurance
• Ownership
  Vehicle titled in your dealership mane – You own the vehicle 100%
• Bankruptcy
  Bankruptcy Advantage – You own the vehicle 100%
• Recovery
  No Repossession – Just Recovery – You own the vehicle 100%
• Collections
  More control over slow or delinquent payers – You own the vehicle 100%
• Depreciation
  Depreciation – You own the vehicle 100%
• Asset Value
  Maximize your dealership “Asset Value” with Lease’T'Own®
• Up-Front Profit
  Capitalized Cost Reduction – provides the “up-front cash you need & the profit goes straight to your bottom line.
• Keep it Simple
  Complete turn-key business model with our ongoing dealer training and support
  

With Lease’T'Own® you are building a positive, long-term relationship with the customer.  You will find that the attitude of the LTO® customer is different than what you’ve experienced with other customers.   You’ll find that your attitude towards the customer becomes different too.

YOU ARE THE GOOD GUY

• You are willing to work with the customers when other dealerships have turned them down.
• Customers will spread the word!
• You decide who you want to work with.  Select only stable customers that you want to keep for the long run.

THE LEASE CONTRACT IS FLEXIBLE

• Unique clause in the lease that allows the customer to return the vehicle to you without any penalty or further damage to their credit if they get in a financial bind.
• This is good for the dealer – you can contract that same car out to the next customer, collect new up-front money, and restart the next revenue stream!

CUSTOMER’S EXPECTATIONS ARE CLEAR

• Your customer is expected to make affordable payments toward ownership, carry full coverage insurance on the vehicle, and to take care of the vehicle.
• If your customer can’t uphold these three clear expectations, they can return the vehicle to you with no further penalty
• There is a flexible and easy out for the customer – again making you the good guy.

CUSTOMER RETENTION IS HIGH

• Customer’s LOVE our program! They talk about it to their friends, relatives, co-workers and therefore, most dealers have low or no advertising costs associated with Lease’T'Own®.
• This is where you shift from “selling cars” to “rolling cars”.  Keep “rolling” your customer from one car to another car so you can keep adding up the profit!  These customers are like any credit healthy customer and want to change cars too.

DEALER TESTIMONIALS

Steve Taylor – SD Taylor Leasing

“Northland’s Lease’T'Own® business model has been a great addition to our group of Dealerships.  Through these tough economic times we’ve been able to keep our business flourishing with Lease’T'Own®.  The program is customer friendly and extremely profitable for our dealerships.  Within the first 10 months of operating the program, my Lease’T'Own® Accounts Receivable topped over 1.7 Million Dollars and the profits keep rolling in”

Joe Zawatski – North Coast Auto

“As a fairly new Lease’T'Own® dealer, I just wanted to drop you a line to tell you what a fantastic program it is.  I’ve been losing money like crazy, with the way the market is here in Cleveland, for the past two years.  In less than 6 months, I’ve gone from selling 4 cars to as many as 22 cars per month.  My clients love the program as much as I do!  My collection rate is over 97%   It just doesn’t get much better than this.”

What image comes to mind when you try to picture a sub-prime customer?  Realistically, the sub-prime customer doesn’t fit a specific image anymore.  It could be anyone who walks on to your lot.  These people represent the estimated 70% of the public that can’t get normal financing today.  They are good people that are victims of the economy.  They got caught in a divorce, a medical problem, or a temporary unemployment that has ruined their credit score. They are stable people that have jobs, have lived in your area for a long time, and their credit score will get better with time.

They need help today and you feel bad sending them away.  They will remember who helped them when they needed it and you want to be that person!

Consider John Anderson.  He has worked for the same company for 12 years. He worked his way up to Vice President, but has recently gone through a divorce.  His ex-wife for the house an the good car in the divorce and all he got was a bruised ego and the second car.  He needs a nice car.  he still has a job which pays well.  His life will go on and his credit will recover.  He will not come back to you after his credit recovers if you don’t help him today!

Consider Amy Smith. She is a single mom who worked her way through school to become a nurse.  She has a full time job with a duration of about three years.  Her car lies dead in your repair ship, but some mistakes in her past are still haunting her credit.  How are you going to help her today and keep her for a long term customer when her credit recovers?

Every Dealership has the potential to keep theses customer with the Lease’T'Own® program!

You simply need to qualify these customers based on stability rather than credit.  Follow your normal credit procedure, but concentrate on length of employment, length of residency, and years with the same bank.

A stable customer has three basic needs:

• They need a job
• They need a car to get them to work
• They need a place to live

You can look at even just two of those basic needs and decide if they are stable enough to pay for a car.  If they have worked for the same employer for several years, it is likely that the employment will continue.  If they have lived at the same address for some time, it shows that they can be trusted to pay necessities as well as a Lease’T'Own® vehicle.  These stable customers will stay with you like a captive audience.

Setting your Lease Price

This example is what many dealers use, but remember it’s your vehicle and you can set the lease price and up-front money at whatever you wish.

Take the wholesale cost of the vehicle and add on any expenses you incurred to bring the vehicle up to saleable condition.  Also add on the expense of the GPS tracking device and KAP Engine & Transmission Warranty.

Total Wholesale Cost of Vehicle
Wholesale Cost of Vehicle	$5000.00
GPS	+ $239.00
Warranty	+ $299.00
TOTAL COST	$5538.00

To set your lease price, we recommend that you take your total wholesale investment and multiply it by 2 to 2.2 (except North Carolina – ask for training materials on how to calculate)

How to Find Vehicle Selling Price
Wholesale Cost of Vehicle	$5,538.00
Multiplier	x 2.2
SELLING PRICE	$12,185.50

Remember these vehicles need to be marked up enough to make the extra work worth while.

Divide the lease price by the lease term to determine your customer’s monthly payment.

Monthly Payment for Vehicle
Selling Price	$12,185.80
36 Month Lease	/ 36
Monthly Payment	$338.49

Establish the Up-Front Money

The up-front money formula we recommend should be approximately 8—10 % of the total payments.

The up-front money is pure profit to the dealer and covers the cost of the transaction.

Vehicle Origination Fee
Selling Price	$12,185.80
	x 10%
Origination Fee	$1,200.00

Profit Example

Profit Example of LTO/RTO Vehicle
RTO Vehicle @ $340 p/m for 36 months	$12,240.00
Add Origination Fee	+ $1200.00
Gross Revenue	$13440.00
Minus Wholesale Cost	- $5,538.00
GROSS PROFIT	$7,902.00

We encourage you to look further at our 72 month Profit Example. Our profit example shows you leasing 10 cars a month for 36 months and then sitting back, feet on the desk, simply collecting the profit for another 36 months. Close to 3 Million dollars gross profit by the end of 72 months!

The profit potential of Lease’T'Own® becomes even more attractive when you realize the hidden benefits of “rolling” customers from one car to another.  Consider this example:

Joe Leases a 2003 Toyota Camry
Wholesale Cost of Vehicle	$5,000.00
Add cost of GPS	$239.00
Add cost of Warranty	$299.00
Total Wholesale Cost of Vehicle	$5,538.00
Cost x multipler of 2.2	$12,183.60
Term of Lease	36 months
Customer's Monthly Payment	$338.43
Customer's Upfront Money	$1,100.00

When Joe comes in to make his payment, ask if there’s any other vehicle on the lot that he likes better.  Of course, after driving around the same vehicle for 12 months, the thought of something different intrigues Joe.  Joe find another LTO® vehicle on the lot, you terminate the current lease, and initiate a new lease for the different vehicle.

Joe's 10 Month Recap
Joe's up-front money	$1,100.00
Joe's Payments for 10 months	$3,384.30
Total Income from Joe for 10 months	$4,484.30

Put the ‘03 Toyota Camry out for lease to the next LTO® Customer.

Now Alice comes in to lease Joe’s ‘03 Toyota Camry.  Since Joe only had the car for 12 months, put the Camry back out on LTO® for the same monthly payment.  Around the 12 month time frame, ask Alice the same question about whether there’s a car on the lot she likes better.  Of course there is!  Terminate Alice’s lease and initiate a new one for the different vehicle.  Put the ‘03 Toyota Camry out for lease to the next LTO® customer.

Alice's 10 Month Recap
Alice's up-front money	$1,100.00
Alice's Payments for 10 months	$3,384.30
Total Income from Alice for 10 months	$4,484.30

Mark now leases the ‘03 Toyota Camry and since it’s a year older now, drop the wholesale value, markup, up-front money and lease term accordingly.  Let Mark finish out the lease term and purchase the vehicle  for a residual value of $500.00.

Mark's 30 Month Recap
Mark's up-Front Money	$900.00
Mark's Payments for 30 Months	$9,983.70
Mark's Total Income for 30 months	$10,883.70

Mark Leases 2003 Toyota Camry
Wholesale Cost of Vehicle	$4000.00
Add cost of GPS	$239.00
Add cost of Warranty	$299.00
Total Wholesale Cost of Vehicle	$4,538.00
Cost x multipler of 2.2	$9,983.60
Term of Lease	30 Months
Customer's Monthly Payment	$332.79
Customer's Upfront Money	$900.00

RECAP of 50 MONTHS
Total Income	$19,852.30
Residual Value	$800.00
Total income received from Vehicle	$20,652.30

Look at the how much profit “Rolling the Vehicle” brought!  The $5,000.00 investment made at the front end, ended up bringing in over $20,000.00 plus tax benefits!

With RTO/LTO®, your income tax is based on revenue as it’s earned within a taxable year.  Sale tax is collected on a monthly basis not upfront, in most states.

You can also take a straight line depreciation on the vehicle because you own it through out the lease.

View additional details regarding tax benefits here.

It is our recommendation that you set up a separate Corporation for your Lease’T’Own® business  in order to maximize your assets.  It also makes good sense to separate the Corporations for liability and possibility tax reasons.

One of the most commonly asked questions is, “How does the accounting work between the Franchise Store and the separate Lease’T’Own® Corp?”  Below is an example of the positive accounting affect of having a separate Lease’T’Own® Corp.

EXAMPLE:

The new car store ABC MOTORS sets up a Lease’T’Own® corporation in this example called, LEASE ME MOTORS, INC.

ABC MOTORS trades in a vehicle with an actual cash value of $5,000.00

LEASE ME MOTORS, INC. has a lease client for this vehicle.  ABC MOTORS sells the vehicle to LEASE ME MOTORS, INC for $7,500.00 on an accounts receivable (contract in transit) which increases the financial statement asset on this transaction by 50%!

LEASE ME MOTORS, INC. does a consumer lease and delivers the vehicle to the lease Client for a total of $11,000.00 with a 30 month term.  The lease client gives LEASE ME MOTORS, INC. $1,500.00 in up front money ($1,150.00 plus the first monthly payment of $350.00) .  When the vehicle is delivered and the $1,500.00 is deposited, the outstanding balance account for the lease client is reduced to $9,500.00

NOTE:  Two tax advantages start to occur immediately at this time for LEASE ME MOTORS, INC.

• The outstanding balance account is very similar to an accounts receivable account.  The BIG advantage is it is not considered an asset account on the financial statement and the income is only claimed as the payments are received!
• The lease vehicle is being depreciated as the payments from the lease client are received which reduces the leased vehicle which is considered an asset, therefore reducing the cash value of the vehicle in inventory.

Let’s turn time ahead 30 days………

LEASE ME MOTORS, INC. has already banked $1,500.00, started to depreciate thevehicle and now just received the 2nd monthly payment of $350.00.

At this time, ABC MOTORS wants to start to get their part of the action.   ABC MOTORS has basically been floor planning this $7,500.00 vehicle for LEASE ME MOTORS, INC for 30 days now.  LEASE ME MOTORS, INC. so far has taken in $1,150.00 up front plus the first payment up front of $350.00 plus the second payment of $350.00 totaling $1,850.00.

At this time, ABC MOTORS gets a check for the following:

$1,250.00 plus $61.64 (10% interest over thirty days).  LEASE ME MOTORS, INC.  Writes a check to ABC MOTORS for $1,311.64.

ABC MOTORS applies the $1,250.00 against the $7,500.00 principal on the vehicle reducing the contact in transit from $7,500.00 to $6,250.00 plus shows $61.64 profit from interest.

The above example is quite common, so let’s show the possibilities.  There are Lease’T’Own® companies with hundreds and hundreds of vehicles on lease.  Let’s just use the example above for only 100 vehicles.  Please follow along.

$1,250.00 x 100 = $125,000.00 coming back to ABC MOTORS every month in principal repayment of the contracts in transit, plus $61.64 x 100 = $6,164.00 = $131,164.  Go ahead, figure it out on a year.  Sounds like a Cash Cow to me!

Don’t Forget…all this time LEASE ME MOTORS, INC. is making money too!  Even after ABC MOTORS made a $2,500.00 profit on the sale of the vehicle to LEASE ME MOTORS, INC, Lease’T’Own® is still going to bring in about $2,500.00 profit over the term of the contract!

Remember:

You need to understand the simplicity of the program:

1. Put a person in a car at a payment they can afford.

2. Understand the power and control of having the title to the vehicle in your name and not the customer’s name.

3. Realize the tremendous profit potential and tax advantages.

4. Keep it simple and you will see a large number of your lease clients lease a second or third vehicle from you, remember they like this program too!

Our Lease’T’Own® program is a win – win for both entities!

Ren’T’Own®/Lease’T’Own® Contract

Northland has done extensive research on leasing laws and has worked in conjunction with reputable law firms through out the country to ensure that our contracts are available to use in 48 states. Northland will defend the Ren’T’Own®/Lease’T’Own® contract, at our expense, if it were ever to be challenged by a state agency.

Contingent Liability Insurance

Each of your Ren’T’Own®/Lease’T’Own® customers are required to furnish primary insurance coverage. Is that primary insurance enough to protect you? Absolutely NOT! Keep in mind that the primary insurance is intended to provide physical damage coverage for the vehicle and liability protection for the driver. It does not cover a legal award for damages brought against the dealer as owner of the vehicle.

For example, your Ren’T’Own®/Lease’T’Own® customer causes an accident in which someone dies and there is a million dollars in damages. The primary policy has a $50,000 limit. Who pays the rest? As titled owner of the vehicle, they will go after you!

In order to protect the dealer, Northland offers two levels of Contingent Liability Insurance coverage at affordable premiums. This coverage is intended to protect your interests from a law suit brought against you as a result of an accident with your Leased vehicle. It is not a replacement for your Garage Keepers Liability.

COVERAGE LEVELS

• Contingent Liability Insurance of $1,000,000.00 (one million) per occurrence, including collision damage with a $1,000.00 deductible, at a very affordable rate of $20.00 per vehicle, per month. (Louisiana dealers, call us for your Louisiana state rates).  Rates lower with volume.
• Contingent Liability Insurance of $5,000,000.00 (five million) per occurrence, including collision damage with a $1,000.00 deductible, at a very affordable rate of $25.00 per vehicle, per month. (Louisiana dealers, call us for your Louisiana state rates).  Rates lower with volume.

CUSTOMER INSURANCE TRACKING

Northland also assists our Ren’T’Own®/Lease’T’Own® dealers with tracking of their customer’s insurance status at no additional charge.

Your dealership name/RTO® is named as “Additional Insured “ or “Additional Interest” on your customer’s insurance policy. This ensures that Northland will be notified of any change of status on your customer’s policy. Should a policy lapse or be cancelled, we send notification to the customer with instructions to re-instate the insurance or return the vehicle to you. We also provide you once a month with a snap shot of your Fleet. This snap shot allows you to easily identify any vehicle that puts you at risk due to improper insurance so you can take action.

In addition, our Ren’T’Own®/Lease’T’Own® dealers have access to professional Customer Service Representatives who are empowered and motivated to assist you in resolving insurance related issues.