Consumers Leasing Cars At Record Pace

The November sales numbers are in and the SAAR continues to soar at 18.1 million vehicles. However, with a rise in auto sales has come a spike in leases.

According to Experian automotive a record 27 percent of vehicle transactions thus far in 2015 were lease agreements. 27.5 percent of vehicle loans this year have been for terms of six to seven years. The average transaction price of a new vehicle is around $33,000, a number that has reportedly led to the upswing in vehicle leases and longer term loans.

Melinda Zabritski, senior director of automotive finance for Experian, spoke on the subject of auto loans to the Detroit Free Press saying, “Leasing has become a more viable financing option for consumers looking to maintain an affordable monthly payment. While consumers can save an average of $84 per month by leasing rather than taking out a loan on a new vehicle, they should make sure leasing fits their lifestyle.

The number of vehicles returning to dealerships from leases is expected to nearly double within two years. 1.7 million vehicles returned to dealerships from leases in 2013, however, that figure is expected to hit 3.5 million by 2017.

Also appearing in Experian’s third quarter “State of the Auto Finance Market” report was news that the average credit score for a new vehicle loan dropped to 710, which is the lowest since 2007. The average monthly payment for a new vehicle jumped $12 from where they were in 2014 to $482, while the same state for used vehicles hit $361, up $3 from the previous year. The average new vehicle interest rate was 4.63 percent, while used vehicles were financed with an average interest rate of 8.76 percent.

What vehicle loan and lease trends are you seeing at your store? Have you seen a steadily rising rate of vehicle leases? What impact do you think the rise in leases returning to dealerships will have on the used vehicle market around 2017?