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.