The Truth About 3rd Party Lease Companies

leasing sign
Photo Credit: argus/

A recent CarProUSA Radio Show caller started our call saying he wanted to lease a new F-150 and was going with a famous third party lease company, not affiliated with a dealership. I sort of jumped on him, then apologized, explaining to him that this was not a good idea.

Third-Party Lease Companies

I enjoy pointing out car dealer ads to my radio listeners that I find false or offensive. For one thing, people seem to enjoy the education, and it gives me satisfaction to think that maybe I can dissuade someone from doing business with a dealership that practices deception.

There are a lot of independent or third-party lease companies in every market that advertise. I am not a fan of these operations and never have been-they add another layer of profit to the consumer that I find needless. I field a lot of questions about these companies, and the reason is their ads make it sound so appealing. People who listen to my show often hear me say that if it sounds too good to be true, it probably is.

For instance, some lease companies promote a “guaranteed trade-in value at the end of the lease.” While technically this is true, every lease has a residual value, which is a guaranteed amount as long as you stay within the obligations of the lease. It sounds great, but the reality is you get this with every lease.

Lower Payment Claims

The big claim with lease companies is that payments are “40% to 50% lower than buying”. In most cases, this is a true statement, but again this is the essence of a lease, to begin with. Leases are calculated by taking the sale price of a car, then deducting the residual value amount. Of course, the payment will be lower, but you also will not own the car. At best you will have some equity, but in most cases, you will not. It is not fair to make a claim of lower payments without a true comparison to the overall cost of leasing versus buying.

Some lease companies throw payments out to the public that sound really good, but most people do not catch the “fine print”. It is usually a very long-term lease, with very short mileage limits per year. For me, the beauty part of a lease is going the shortest amount of time possible, which allows you to avoid the maintenance costs you incur as a vehicle ages. Three years is just about perfect to avoid any repairs or maintenance costs, you might even get away without buying a set of tires.

Crunch the Numbers

I saw an ad online recently from a third party lease company that looked great at first glance on a new BMW. It was a $35,000 car, for just $469 per month, with just $2000 out of pocket. That is a pretty attractive payment for a hot Bimmer. A deep dive shows it to be a 60-month lease, so the total amount of the 60 payments is $28,140. You paid $2000 down, so now you’ve spent $30,140 on a $35,000 car. So what is the problem? Simply put, at the end of the lease you probably won’t have anything to show for the $30,000 you paid out. If you want to own the car at the end of the lease, you can buy it for $15,750. If you do buy the car, now you’ve spent almost $46,000 on a $35,000 car.

No Manufacturer Involvement

I want to point out, too, that no third-party leasing company can buy from an automobile manufacturer. They buy from local dealers, who make a profit selling the cars, then the lease company adds in another layer of profit. Just about all the manufacturers offer lease incentives and special interest rates to their dealers that lease companies simply cannot utilize.

In fairness, most lease companies offer some nice services, like coming to your home or office with your new car, but since Covid-19 started, all of our CarProUSA Certified Dealers have gotten really good at this also.

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Hey Jerry,

Pretty interesting article. Even more relevant today. What rebates and incentives do dealers have access to that third-party leasing companies don't?
The Car Pro
Many of them come from the captive finance companies like Toyota Financial, which 3rd party lease companies cannot get. There are other factory rebates that only the dealer can get. Also, to help move leases, some captives will lower the money factor to .000001, which makes the payments much lower and 3rd parties can’t get that either.

Jerry Reynolds
That Guy
Okay so first of all i do not agree with your math. If minus $30,000 from $35,000 i think you're left with $5,000. Now that will be your buy out price. And most likely if you had leased that BMW and you wanted to buy it out you would probably get it for less than $5,000. Now if a dealer came said to me $15,000 ill sue him right away and ask him to repeat it and record him, i don't care because he is straight up trying to fraud me white collar style. And i'm too smart for that.

Now second, leasing companies have a way better relationship with dealers then the average joe trying to lease a car. if you go to a dealer and try to get a lease they would like you said want a down payment of $2,000 and then add all the taxes DMV fees and dealer fees and etc. So you're not looking at only $2,000. In reality you're looking at more than that probably $3,500 to $4,000.
If you go to a leasing company you put NOTHING down. Now how the hell can anyone argue with that? It's common sense better deal. Plus teh dealer would give them a better pricing hence you get the even better pricing just because of the "better relationship the leasing company has with the dealers".

So truly your monthly payment will be cheaper than $469, no down payment, no hassle, and no feeling threatened or feeling like you're being played.

Come on who ever wrote this article why dont you tell the people the honest truth??
You can Email me at
Amy P.
CLEARLY, you don’t understand leases, you should read some of my other articles on leasing. ANY dealer will do a zero down lease, it just make the payments higher.

READ the article more carefully. What you pay toward the lease is irrelevant, what the payment is doesn’t matter, THE RESIDUAL IS SET IN STONE. In the example I used, the $15,750 will not change, that’s what you owe at the end.

If you think all the money you paid toward a lease affects the amount owed at the end of the lease, you need to read the rest of my leasing articles.

Jerry Reynolds
Wow you have no clue what you are talking about and have ZERO understanding of how a lease actually works. Please don't ever give anyone advice on this matter.

And dealerships generally dislike leasing companies for reasons you clearly won't understand so I won't go into it.

Difference being that if they purchased they would OWN the car at the end.
The Car Pro
REALLY Nick? Let's compare credentials before you tell me I don't know what I am talking about.

Did you own a chain of dealerships including the largest Ford dealership in Texas?

Did you ever head up the largest group of dealership owners in the nation?

You probably weren't named the USA Today Dealer of the year, right?

What channel can I find YOUR nationally syndicated radio show on?

You came to a gunfight with a knife, Dude. I wrote the article BECAUSE OF people like you.

Jerry Reynolds
out to lunch
you obviously do not understand leasing a vehicle. everything Jerry says is correct
Tim .
In your opinion, which is better to leave a car, a third party or a dealership?
The Car Pro
Hi Tim! Absolutely the best way to lease is through a dealership for all the reasons outlined in this article. Good luck and let us know if we can help connect you with one of our dealers!
Mike .
Hi. I am looking for an institution that would provide a third party lease, not a company that delivers to my door, but more like a bank offering a lease. Do you have any company/bank names?
Jerry .
Mike, I don?t know of a bank that does this, they just don?t have the infrastructure to administer leases and most are not licensed to do so. I wouldn?t recommend it anyway, click:

What About 3rd Party Lease Companies?
Let me know if I can help you, I am certain you can get the best deal by going through one of my Certified Dealers.

Jerry Reynolds, President
Car Pro Radio Network
Steve .
Once again I must take issue with your article. Third party leases serve a purpose and serve a certain market segment. Yeah, that's a broad, open statement, but, hey, you started it. Are they all honest and upfront? No, but the same can be said for dealerships offering leases. Why didn't you mention that?

Also, your leased Bimmer example neglects to mention that if the customer purchased the car instead of taking advantage of the convenience of the lease, he would have paid almost the same $46K for the car with finacing, especially with that $2,000 down payment.

For the most part, I enjoy your articles and insigths.

Thank you!

Steve H.
I like the topic and the discussion, the points and counterpoints are all interesting. I'm just trying to figure out whether the content is still relevant in a changing market climate. So, I'm looking at the dates and it looks like the article was written on 10/23/2018. Then, there are responses from 2012 and 2015. How did this happen?
The Car Pro
Scott, I think the article is actually more relevant today as more automakers are getting serious about leasing and putting more incentives on leasing. I wrote the article in 2012, updated it in 2015, and again in 2018. This is why some of the older comments are still there.

Jerry Reynolds