In April of 2013, DriveTime launched what it’s calling its Cancel Anytime Lease Program. Starting with a down payment typically lower than what would be required to originate an installment contract, a DriveTime customer can sign a 30-month lease. After a down payment of about $1,000, the consumer has a vehicle that boasts an included warranty and regular basic maintenance — with the option of turning in the keys and walking away if personal circumstances create a situation that typically necessitates a repossession.
In an interview with BHPH Report, DriveTime senior managing director of retail operations Lance Spotleson went through the intricacies of the leasing program and the hopes the company has for it to become a major driver of moving metal off of its lots nationwide.
“It’s a lease we offer customers who might have fewer options for cars, but we want to be able to provide those customers with an opportunity to get into a vehicle,” Spotleson said. “When those customers come to our dealerships, they have quite a few options. Some customers might not have the down payment to purchase a car - even from us and certainly not from other dealerships.
“If they don’t have their required down payment, the Cancel Anytime Lease Program gives them the opportunity to obtain their own reliable transportation that they wouldn’t have access to otherwise,” he continued.
Spotleson explained that each DriveTime location has a designated lease fleet consisting of about 20 to 25 percent of the store inventory, depending on the size of that particular lot.
“We try to make sure we have a selection for the customer. We tailor it based on those lots and what they have with the lease program,” Spotleson said.
While the leasing program first started in April of 2013, Spotleson indicated it wasn’t until this past January that the program became available at all 119 DriveTime dealerships. He noted that laws regarding the licensing of leased vehicle as well as different tax codes from state to state, kept the company from pushing out the program too quickly.
“We moved very slowly to gain a better understanding of all of the title and tax laws, working with the states along the way,” Spotleson said. “We wanted to make sure we could do it right in that state.”
Now the leasing program is flourishing, particularly in states where DriveTime does much of its business, places such as Texas and Florida.
“It’s been well received,” Spotleson said. “It’s another option for customers who thought in the past that they would never be able to get a car from us or anyone else and especially with the benefits that our lease program includes.
Spotleson highlighted three other components of DriveTime’s Cancel Anytime Lease Program that differentiates it from other initiatives in either the new or used-vehicle space. The first one has to do with insurance.
“To make the lease program more accessible to our customers, only liability insurance is required,” he said. “You don’t have to have full coverage, which obviously separates us from everyone else out there.”
Next, Spotleson reiterated the possibility of avoiding a repossession.
“If a customer had purchased a car and they lost their job, they’d have to figure out where to come up with the money for a payment or face a possible repossession. With our Cancel Anytime lease, if a customer runs into an issue or has a problem, all the customer needs to do is bring the vehicle back to us, give us the keys and they’re done,” he said.
“They can do it anytime during the lease. It’s a 30-month contract, but if due to a hardship for any other reason they don’t need or want the car any longer, as long as they bring the vehicle back to a DriveTime dealership, we’ll cancel the lease at that time,” Spotleson continued.
Furthermore, Spotleson mentioned that DriveTime’s Cancel Anytime Lease Program customers also can exchange vehicles.
“They may be driving a two door, and then find out they’re going to have a baby and now they need a four door. Or they may be driving a car and they want a truck or a van. At any time during the lease, they can bring that vehicle back and exchange it or upgrade it for another vehicle,” Spotleson said.
“We just cancel the first lease and start a new lease. But they don’t have to come up with the same down payment. We just have an exchange fee for that. It’s less money that’s exchanged,” he went on to say.
While this plan is already is in motion, Spotleson insisted that DriveTime remains in the position of looking for ways to make the Cancel Anytime Lease Program better.
“We’re going to continue to grow and expand our leasing program. We’re already looking at different types of vehicles as we enter 2015, to provide a wider variety of options to our customers,” Spotleson said.
“We continue to feel like this program allows us to explore many different types of opportunities. This first 18 months has been just about learning,” he continued. “Now we get to build off of what we have learned.”