There are several reasons for the importance of discretion. Specialty lease providers know that market intelligence regarding who is buying or selling an expensive vehicle can drive the price either up or down, to the detriment of their client. They also are sensitive to the data privacy concerns of their wealthy clients, who do not want their financial or contact information shared with others; nor do they wish to have their credit rating affected by multiple credit agency reviews in an application process. Some clients simply don’t want to have others know that they are financing a vehicle.
Time To Re-Think The Path Of 'Lease' Resistance?
For far too long, and often for many valid reasons, leasing has been discounted by wealthy individuals and their advisors as a viable means to acquire the world’s finest automobiles.
However, for those who are willing to put aside outdated emotional baggage associated with any type of automobile financing, and equipped with a well-informed understanding of how specialty leasing for exotic and vintage cars really works, there are new opportunities to apply leasing as a strategic tool to support broader wealth management objectives.
For wealth advisors, this exploration begins with a “level playing field” examination of leasing as a viable option: calculating the use of funds factor in outright purchase versus leasing; measuring the state tax implications of an outright purchase; comparing lease payments with traditional bank financing; and investigating whether the car can qualify for leasing under a business name using pre-tax dollars for payments.
To protect clients, the due diligence process should also include close scrutiny of the specialty lease provider’s market reputation, longevity and standards of client service. To validate the leasing firm’s credibility, contact a few current and former clients, and request references from their lending sources.
If a wealth advisor and client agree to pursue leasing as an option, they should proceed in a diligent manner. For starters: ask for all lease quotes in writing; require complete transparency, including an amortization schedule; and review the firm’s early termination policy. All leasing firms can be helpful in getting people into leases; the best leasing firms are also helpful in getting people out of leases when it’s necessary.
Although leasing may not be the best choice for every situation, or for every client, wealth managers should be prepared to educate and advise clients regarding the viability of specialty leasing as a financing alternative for acquisition of their exotic and vintage cars.
Mitch Katz is founder and CEO of Connecticut-based Premier Financial Services (PFS), a specialty finance company providing leases for exotic, vintage and highline motor cars for more than 20 years.