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Auto Leasing Hits Record High: Do We Think About Cars Differently Now?

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Once upon a time, the thought of leasing a vehicle was a foreign concept to new-car shoppers. "Why rent when you can own?", our grandparents said.

But oh, how things change. According to Experian Automotive, leased vehicles now make up a significant chunk of dealership business -- and in fact, that chunk is the biggest it's ever been.

During the first quarter of 2013, leases accounted for 27.5% of all new vehicles financed, the highest percentage Experian has seen since it began tracking stats in 2006. That figure is up more than three points from Q1 of 2012, when it was 24.4%.

What's particularly interesting is that this has happened at a time when interest rates remain low: in Q1 of 2013, the rate was 4.5%, a tenth of a point below Q1 of 2012.

Loan terms are stretching, too. In Q1 of 2012, the average loan was 64 months long; in Q1 of this year, loans averaged 65 months. Those longer loans help shoppers keep their notes low.

All of which raises a very important question: why are leases so popular now, when dealers offer a multitude of ways to make buying outright more affordable?

For starters, even though the U.S. economy seems to be recovering nicely, many customers continue looking for ways to reduce their monthly bills. Leasing is one way of doing that.

Then, too, there's pent-up demand and the urge to splurge. Luxury vehicles make up a huge portion of the leasing mix, and not surprisingly, the jump in lease numbers is happening at the same time we're seeing a surge in luxury vehicle transactions. (Case in point: Porsche just had its best May ever.) Whether such extravagance is a good thing is up for debate.

We might also suggest that the increased interest in leasing has something to do with the way we think about our vehicles. Owning a car was once a sign that you'd reached adulthood, but today, car-sharing services like Zipcar and RelayRides are gaining momentum, and here in America, we're driving a lot less often. Car ownership simply isn't as important -- practically or socially -- as it was just a few years ago.

And it's not just at dealerships where we're seeing this trend: the idea of renting what we once would've owned is now commonplace. We don't buy videos, we stream them from Netflix. We don't keep documents on our hard drive, we build them in Google Drive. We don't even have to purchase clothes anymore: we can rent them.

Is the leasing uptick part of that shift? Is the phenomenon known as "pride of ownership" on its last legs? Share your thoughts in the comments below.

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Comments (9)
  1. It seems that there is an overall shift towards a lease model in many areas. Even for those who finance, I'd be willing to bet that most purchase a new vehicle before the old one is paid off. Long gone are the days of paying off a mortgage. Even major software applications are moving to that model.

    Sadly, in a society where everything is becoming so transient, the "pride of ownership" is a casualty.
     
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  2. Vehicle industry is also going thru MAJOR engineering Transition -Hybrid, Clean Diesel, 100% Electric, 8 Speed Trans, Future Hydrogen Fuel Cell, 10 and 12 Speed Transmissions all seeking to enhance Driver Experience, Fuel Economy, Luxury etc... so to that end may I suggest 3 Year LEASE at present is a great OPTION ... dont lock yourself into any Technology ... Wait to Purchase until Vehicle Technology is PROVEN reliable / becomes a standard for next 10 yrs or SO ... Lease allows the customer to easily move into the NEXT enhanced Technology -- My two cents worth
     
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  3. For the most part, I think you are spot on. The life-cycle of technology is growing shorter. Once something is "proven", it becomes outdated (either improved or replaced) by the next big advance. Granted, a lot of it is marketing hype and planned obsolescence. For those of us looking for a longer term option, it's a complicated playing field.
     
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  4. There are negatives to leasing. Drive too many miles...pay a penalty. Don't take excellent care of the care...pay a penalty. So when you turn it in chances are you'll have to pay extra.
     
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  5. Yes, there are negatives. I suppose if you are a slob and an irresponsible person, then leasing is NOT for you. I treat my leased vehicle the same as if I owned it. When my car is returned at lease end, it is as good as the day I picked it up!

    Usually the dealer ends up buying the car from the leasing company because of the excellent condition the car is in. The only thing the dealer needs to do with my car is take off the license plates and put the car on their front line! I take pride in ownership.
     
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  6. I have leased at least a half dozen cars now. I look after the car, maintain it as if I own it. Then I let people know that have it leased and the date the lease ends. On most occasions I line up a buyer and there' s been times when my leased car that I turned in went back out to a new owner within a day.
     
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  7. I have been leasing for decades for several reasons. First of all, I get tired of the same car after a while, no matter how much I like it. I also do not like to own a car that has no warranty because repairs are so expensive and finding a good mechanic is difficult without getting ripped off.

    In addition, if you end up with a lemon and for reasons beyond your control cannot file a Lemon Law claim, then YOU are stuck with a piece of crap that YOU have to sell, trade in whatever at a much depreciated value because it is defective. A car with a long warranty or buying an extended warranty is USELESS if the dealer/manufacturer claim that there is nothing wrong with the car.

    I love leasing. If there is a problem the manufacturer gets it back
     
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  8. I think the high price of the vehicle is the reason there are so many people leasing, if people had to have the cash to purchase or at least a good down payment the price of cars would be a good deal lower. It is the low interest & no money down that is enabling buyers to keep on getting new cars. The dealers are making a huge profit at the expense of the buyer that can not afford to purchase it outright. This Kind of consumer debt is out of control as I see it
    Thanks
     
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  9. -Missed Natural Gas Powered Vehicle Engines per my earlier Post
    -Consider the VAST Natural Gas exploration ( Shale )Locations
    -However SAFE Fracking Requirements along with Third party Monitoring to verify all Steps in extracting Natural Gas is being performed with Environmental safety FIRST and Foremost
    -Major Financial Fines applied as required
    -GLOBAL warming concern
    Natural Gas powered vehicles far exceed the CLEAN burn of the Fuel as compared to conventional Petro Gasoline
    -USA JOBS in the Natural Gas exploration & extraction
    -USA manufacturing coming back due to Clean Natural Gas
    -USA has Got to get OFF the Petro Gasoline for our financial security of America -- OPEC has us held hostage to Petro
    -GO Natural Gas
     
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