How to Become an Auto Leasing Companyby Michael Ryan
Becoming an auto leasing company is a very long process that requires applying for necessary state licenses, establishing the business and building a client base. Auto leasing companies provide consumer and commercial leasing to a range of clients, including retail purchasers of new and used cars, corporate fleets and short-term renters. Most private leasing companies focus on fleet management and short-term leasing, as the captive leasing companies owned by auto manufacturers have a near-monopoly on new car leases.
Write a business plan. Before starting the lengthy application for a dealership or leasing license in your state, write a short business plan and make sure that your leasing company could be sustainable. As a leasing company, your organization will be responsible for purchasing, registering and keeping all vehicles on the road legally. You must also find a niche in your local market. For example, an auto leasing company focusing on tow trucks and delivery trucks may have more success than one that offers passenger car leasing, as this market is heavily saturated. If necessary, speak with your bank or credit union to check on financing options, as purchasing vehicles to be leased is a very expensive requirement.
Find a place of business. In most areas, a business address must be established before a dealership or leasing application is reviewed. If you currently operate a new or used car dealership, you will be able to use your current address. However, if you are starting a leasing company as a new venture, you may need to rent or purchase an appropriate facility before completing your department of motor vehicles application.
Apply for licensure in your state. Check with your local department of motor vehicles to see if there are any special requirements to establish a leasing company in your state. The license application process can take weeks or months, and in some areas you must have a business address for your leasing company before filing the application.
Purchase vehicles. If you plan to offer vehicles for short-term leases, a fleet of vehicles must be purchased before operations start. Check with fleet managers and Internet sales managers at local dealerships to get the best deals. Let them know that you are a growing fleet account, so you can help them make up for low profits by purchasing a large number of cars and trucks. Remember that you will need to pay registration fees and renew plates on these vehicles on an annual basis.
Set leasing rates. Once you have an inventory of vehicles, you can set lease rates. Whether your goal is to sell short- or long-term leases, you must set your rates so they are competitive. You must also consider your leasing company's bottom line. The rates must be high enough so that they cover each vehicle's depreciation, allowing you to sell vehicles as used and make a profit when they are no longer needed in your fleet.
Items you will need
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