To lease or not to lease. That’s what a lot of people practically and non-rhetorically ask themselves when car shopping.
Answers vary, depending on consumer circumstances. That’s why Ally Financial developed a new online tool to help shoppers decide if buying or leasing is best for them.
Free on the financial services company’s website, the interactive tool asks users about:
- The number of miles they typically log annually.
- Their level of interest in maintenance beyond basic oil changes and tire rotations.
- How long they usually keep a vehicle before replacing it.
- If they want to make a large down payment or not.
Users submit their answers, and based on those, Ally offers buy-or-lease recommendations.
For instance, people who log fewer than 15,000 miles (24,000 km) a year are leasing candidates, because they needn’t worry much about exceeding mileage limits. Conversely, road warriors might opt to buy, lest they pay excess mileage fees at the end of a lease.
Consumers using the tool can get additional information on financing options, or head for the dealership with knowledge on available choices, says Andrea Riley, Ally’s chief marketing officer-Dealer Financial Services. “Well informed consumers do their research and come armed with a game plan.”
The tool is at www.ally.com/auto/personal/explore-financing-options/.
Leasing has seen ups and downs over the years. It peaked in 1999 with 3.7 million deliveries. Nine years later, General Motors and Chrysler virtually ended their leasing programs because of major losses from poor residuals on returned vehicles.
Leasing hit a low point in 2009, dropping to 1.1 million units. Since then, it has steadily grown, passing the 2 million-unit mark in 2011, reaching 2.5 million in 2012 and exceeding 3 million in 2013, according to Manheim.
“Leasing continues to grow in popularity among car shoppers, especially those hoping to stay within a strict monthly budget,” says Melinda Zabritski, Experian’s senior director-automotive credit.
The average monthly lease payment of $420 was $51 lower than the average loan payment this year, she says. “That can make a big difference to consumers trying to stretch their dollar.”
While consumers may debate whether they should buy or lease, dealers clearly prefer they do the latter.
Dealers like leasing because it returns consumers to the market sooner, offers better chances for repeat business because of end-of-lease customer contact and steadily replenishes dealership used-car lots with off-lease vehicles.
