COSTA MESA, Calif. Leasing has been picking up over the last year, and the momentum only will accelerate as loan rates rise, analysts agree.
Melinda Zabritski, senior director of automotive credit for Experian, told Credit Union Journal that leasing now represents 27% of all new car sales, up from historical averages of 23% to 24%. “Leasing is certainly taking off, with payments on average of about $50 less than what we see on a loan.”
That lower payment, noted David Jacobson, president of GrooveCar, Hauppauge, N.Y., will be more attractive as rates rise. “Loan terms keep going out father and farther, which lets you know consumers want that lower payment. That’s why leasing is out of control. We are experiencing our highest lease penetration since 2006. The last three months have been the busiest in the history of our leasing company.”
Jacobson added that automakers will continue pumping out attractive lease offers to keep consumers turning over cars sooner. “The carmakers know that longer-term loans keep people in cars too long.”
Pete Radike, director of product management for Fiserv’s lending solutions division, Brookfield, Wis., pointed out “there is a 30-year history that shows as rates go up leasing goes up, and vice versa. The driving force to have someone buy a car is payment.”
