Our initial user beta test of ShrewdLease, during December 07, provided us with great feedback from across the country.
One of the most frequent comments received, was a request for better definition of how ShrewdLease works.
Towards this goal, this document seeks to address this request.

We can begin with an overview of the components of a lease that a consumer is meant to understand, in order to be considered reasonably well versed in leasing, followed by a leasing time line from start to finish.

START OF LEASE

A consumer is expected to use his skills to negotiate on the many ingredients shown above, comparing them from vehicle to vehicle across dealer to dealer, and lease term to lease term. Putting aside the enormity of this task for now, assuming a consumer moves ahead with a lease he is comfortable with, we can move forward to the lease years.
 
DURING THE LEASE

A consumer makes his payments and enjoys trouble free motoring with fixed month by month motoring costs all the way through to lease completion.

END OF LEASE

At the end of the successful lease, all of the lease charges have been paid, the allowed lease mileage has been driven and the the vehicle is handed back to the leasing company without any additional end of lease penalties being charged by the leasing company.
The consumer has no asset or equity, nor do they have any remaining overhead. (they don't own a car or have any money to show for it) All they now have is a history of trouble fee motoring and an exact cost for the completed lease. 

The completed lease can now be viewed as this:

It should be noted that this end of lease display is a lot simpler and easier to understand than the ingredients of a lease display shown earlier.

SO WHAT MAKES A SHREWD LEASE?

A shrewd lease is a lease where upon lease completion, the overall lease costs are low. If they are higher, the lease was more expensive, so could not be as shrewd.

WHY DOES LEASING SEEM SO COMPLICATED?

Before we answer this, you should first consider the following:

WHY DOES APPLE PIE SEEM SO COMPLICATED?

A good cook must be able to balance the right quantities of the many possible pie ingredients, prepare and cook them together in the best possible fashion. Once successfully prepared, a good pie can them be be enjoyed by a lucky recipient.
For the recipient however, the prepared pie need only be viewed like this:

There are many different types of apples.
There are many variations on apple pie recipes, each with their own flavor and merits.
There are many different ways to prepare and cook each individual pie......

However, we all know you don't need to know the exact amounts of ingredients and preparation details in order to distinguish a good apple pie from a bad apple pie.

THE SECRET IS IN THE TASTING OF THE PIE.

BACK TO THE QUESTION- WHY DOES LEASING SEEM SO COMPLICATED?

As with apples, there are many different makes and models of vehicles.
There are many variations on lease terms and mileage allowances.
There are many different types of payment terms for the many various leases.

The problem that leasing suffered with until now, is that unlike apple pie, there was no easy way to compare (taste) one lease to the next.

SHREWDLEASE- THE TASTE SOLUTION

We showed earlier what makes a shrewd lease compared to a poor lease, shown again here for your review.

Comparing apples to apples is easy.
The shrewd lease above is easily spotted when sized next to the poor lease.
Comparing leases, regardless of size is now made possible with ShrewdLease.
ShrewdLease accomplishes this by providing a lease measurement (taste) that can be applied to all leases.

ShrewdLease takes the overall lease costs, and views them with regards to the Manufacturers Suggested Retail Price (MSRP) and the amount of vehicle use the lease provides.

The MSRP is carefully established by the manufacturer for each and every model, to position their vehicle exactly, inside of the chosen segment of the market place.

The automotive industry uses the MSRP for calculating many values. For instance, used vehicle pricing, lease residual values, insurance premiums, to name but a few, are all linked to MSRP.

Since the Automotive industry relies so heavily on the MSRP for their own calculations, there is little reason why consumers should not also use this value when comparing vehicle leases.

The amount of vehicle use the lease provides for, is a simple calculation of the total lease mileage allowance.

EXAMPLE

This method of analysis can be tested here by yourself:

Congratulations if you answered Sedan B. You would make a shrewd lessee!

The example above is extremely simple to follow. Nevertheless, what it represents is the foundation of ShrewdLease evaluation.

SO HOW DO WE DO IT?

Our leasing algorithms are proprietary, however, in general terms, an overview of the process is shown below:

RECAP

We take the ingredients of a lease:

Combine them and compare them to the vehicle MSRP:

Return a single metric, representing the value for money the lease offers.

CONCLUSION

SHREWDLEASE=UNBIASED LEASE EVALUATION

We don't need to know the make or model of the vehicle. We don't need to know the state tax rate, or the interest rate being charged, or the discount being offered on the vehicle, or the title and registration fees, or the delivery charges, to be able to measure a lease.
This is because all of these values have already been accounted for within the overall lease numbers. (Total down payment and monthly lease payments)

A HIGHER SHREWDLEASE FACTOR=A BETTER VALUE LEASE

Regardless of whether you are leasing a $136,000 Porsche, or a $16,000 Pontiac, the evaluation process is identical. Using ShrewdLease, any lease offer can now be evaluated on an even playing field