Since the end of the Great Recession, car leasing has leaped in popularity by over 40%, and with millennials it’s even higher. Almost a third of all new cars now are leased, not purchased.
Leasing was popular before the economic downturn, but sunk to a low point of about 18% during the recession. Since the recovery, the numbers have climbed to record levels.
Why has leasing become so attractive and popular just in the last few years?
There are several contributing factors.
First, the prices of new cars continues to climb every year. The average price of new vehicles is now well over $35,000. For most people, this makes new cars less affordable. Monthly payments, even with long loan terms, are higher than many people can afford.
Second, car manufacturers and their dealers have fueled the attraction for leasing by offering outstanding special lease deals with low monthly payments that customers couldn’t possibly expect to negotiate on their own. Payments are significantly below loan payments for the same vehicles, even with special 0% interest rate loans. These kinds of limited-time deals are now offered every month by nearly every car company. Before the recession, such deals are offered much less often. Although some deals are restricted to certain models and styles, companies such as BMW offer genuinely good lease deals on nearly every model in their product line, every month.
Third, one of the largest segments of our modern consumer population is made up of millennials, those people who now in their mid-20s to mid-30s in age. Sometimes called Gen Y, they have different views about life, jobs, and money than their parents and grandparents. They tend to have fewer savings, more debt (often student loans), and tend to rent instead of buy their homes. Home ownership is not as important as it once was.
Millennials like to have new things, new styles, new technology, and spend more time on the move. However, they are also cost conscious and watch their budgets. Being able to have a brand new car every 2-4 years at the lowest monthly payment amount is important to them. This is why car leasing is especially popular for this rising segment of the population.
What leasing offers to modern automotive consumers
As has already been stated, leasing offers a relatively short-term commitment (2-4 years) to acquiring and driving a brand new car with all the latest styling, technology, and safety features, at low monthly cost, with no end of term “baggage.”
Furthermore, it eliminates the cost and hassle of car repairs since the manufacturer’s warranty can cover the entire lease term. Every 2-4 years, there is an option point that provides an opportunity to change directions and 1) return the car and begin another lease in another brand new car, 2) return the car and buy another car, or 3) purchase the car and keep driving it.
Car leasing is an attractive option for many modern consumers. While it’s very popular and right for many, it’s not for everyone. Our Lease Guide provides everything needed for you to make the right decision for your particular lifestyle and objectives.
Contact us today and let’s lease your next vehicle.