How do car leasing companies make their money?

[sonofkath]

I was just curious where leasing companies (brokers) earn their money. Do they charge admin fees? Get a one-off commission from car dealerships or manufacturers? Get a monthly commission etc?

 

[Faevilangel]

Some charge admin fees for setting up the lease and most will be getting a commission from their suppliers.

 

[alwaysinamess]

I used to do it and id never recommend you lease

what happen you would have a base price and say that was £100 a month from the finance company (the leaser is never often the finance co) then we would charge you say £110 a month and the £10 would be ours

So on a 36+3 deal we would get £390 commission, sometimes it would be much higher than that + there might be other admin costs etc, but that is basically how it worked.

 

[sonofkath]

I used to do it and id never recommend you lease

what happen you would have a base price and say that was £100 a month from the finance company (the leaser is never often the finance co) then we would charge you say £110 a month and the £10 would be ours

So on a 36+3 deal we would get £390 commission, sometimes it would be much higher than that + there might be other admin costs etc, but that is basically how it worked.

do you mean you'd never lease a vehicle or you'd never recommend setting up a leasing firm?

 

[alwaysinamess]

Personally I would never lease a vehicle again unless it really really made sense to, but yes I would set up a firm,.

We had a good run but we were say 3rd down the line, so we were reselling another companies offers, so they had there bit and maybe someone else had a bit too.

But also a lot of aggro, doctoring peoples accounts and faffing about trying to get people credit checked, so many people got refused, it might be a lot harder now the banks have tightened up, I did this I think back in 2002 so over ten years back.

 

[sonofkath]

Personally I would never lease a vehicle again unless it really really made sense to, but yes I would set up a firm,.

We had a good run but we were say 3rd down the line, so we were reselling another companies offers, so they had there bit and maybe someone else had a bit too.

But also a lot of aggro, doctoring peoples accounts and faffing about trying to get people credit checked, so many people got refused, it might be a lot harder now the banks have tightened up, I did this I think back in 2002 so over ten years back.

That's a really good point you make about people being turned down for the credit nowadays - i think you're right that it will be even harder now.

 

[alwaysinamess]

That's a really good point you make about people being turned down for the credit nowadays - i think you're right that it will be even harder now.

It was hard enough then but also it could have been our clientel, they were how shall I say, unsavoury characters.

 

[businessfunding]

There are many brokers out there who aren't crooks (the majority in fact) - sadly the bad ones taint the whole industry.

There are 2 basic broking models - you can either simply work on an intro fee from the contract hire firm or you can effectively become a car supplier taking a mark-up on vehicles (and potentially volume bonus when you are up & running) then adding the package around the vehicle

Credit is tough, but car finance remains the most relaxed end of the market for underwriting.

The only thing I would add is that this is a highly competitive market with plenty of online competition.