Leasing and used cars.

[BMWTurboDzl]

The WSJ has a good article on how the leasing market diminished over the past couple of years due to supply shortages.

“The cycle is definitely out of cycle,” said Jaycie Dane, general manager of sales operations for Toyota Motor Corp.’s Lexus division in North America. Leases accounted for 20%-25% of Lexus sales in recent months, compared with prepandemic highs of around 40%, she said. “It’ll be a rocky road for a few years.”

'“If you buy it or if you lease it, your prices are pretty similar,” said Ryan DeNooyer, general manager of Kalamazoo, Mich., dealership chain DeNooyer Automotive. About 20% of his customers leased vehicles in recent months, compared with 45% before the pandemic.'

The knock on effect is going to be a dearth of used cars in 2-3 years because buyers who financed hold on to their cars for a longer period of time.

Basically don't wait around for "good deals" on used cars for the foreseeable future.

 

[fisher83]

When my wife got her Subaru Impreza in 2019 they had zero down leases for I believe about $250 per month. She bought instead but that still didn't seem bad for zero down. Now that same car is around $3500 down just to come in right under $300.00.

 

[joekingcorvette]

I see a lot more vehicles on car lots around here. The higher interest rate is definitely slowing things down. As far as leasing is concerned it's anyone's guess on what will happen. The WSJ isn't the god almighty expert on everything.

 

[SwampSurvivor]

When my wife got her Subaru Impreza in 2019 they had zero down leases for I believe about $250 per month. She bought instead but that still didn't seem bad for zero down. Now that same car is around $3500 down just to come in right under $300.00.

That's why we leased 2 Sentras in a row for fiance's daily driver. Nothing down, $200 a month for the first one / $220 a month for the second one. I can't touch that in maintenance/repairs and depreciation on a new or used vehicle!

Leasing, back then, was a tool you could use with a base model vehicle to put yourself ahead on depreciation and repair costs with the upside of getting a new vehicle every few years.

Someone buying a Lexus IS or ES would have way more depreciation in 3 years than you'd lose leasing a nissan.

 

[supton]

The knock on effect is going to be a dearth of used cars in 2-3 years because buyers who financed hold on to their cars for a longer period of time.

Basically don't wait around for "good deals" on used cars for the foreseeable future.

Ouch.

To think, a few months ago, I was thinking, just wait for the future, things should get better... maybe I should have jumped when I thought it was time to get another vehicle.

Oh well.

 

[dishdude]

It's been like this for at least 10 years...the value of 2-3 year old cars is so high there's no reason to keep a car long term. I've been able to cycle through new cars with a low cost of ownership.

 

[Redright9]

I would think leasing would be on a rise as car prices are getting so expensive.

 

[John105]

It's interesting that this topic used to erupt into heated exchanges 20 years ago, not anymore. There is something I cannot relate to, however...my buddy just emailed me 2 weeks ago all the cars he's looking at are $900/mo with $6k down to lease, I just kinda shrugged it sounds like a ton of money. I've said to my dad, my wife and I come in at double the median income of where we live, yet, all our cars are old and we don't seem to keep up with the Jones. The last car we bought new was $41k and that was a lot to us (2011). Today seems like people are not phased by prices....

 

[IndyIan]

I would think leasing would be on a rise as car prices are getting so expensive.

In Ontario at least dealers have to show the total cost of leasing, and the total cost of leasing seems to get quite close the cash price of the car... A Prius Prime total lease commitment for 6 years is ~$35k with a $12k buy back value, and outright purchase is $39k.

 

[fisher83]

It's interesting that this topic used to erupt into heated exchanges 20 years ago, not anymore. There is something I cannot relate to, however...my buddy just emailed me 2 weeks ago all the cars he's looking at are $900/mo with $6k down to lease, I just kinda shrugged it sounds like a ton of money. I've said to my dad, my wife and I come in at double the median income of where we live, yet, all our cars are old and we don't seem to keep up with the Jones. The last car we bought new was $41k and that was a lot to us (2011). Today seems like people are not phased by prices....

The large down payment really negates one of the primary advantages of leasing too. I'm not really against leasing but the terms have to be favorable enough to be worthwhile.

 

[John105]

The large down payment really negates one of the primary advantages of leasing too. I'm not really against leasing but the terms have to be favorable enough to be worthwhile.

In my mind, I think of a lease like a rental. If I were to rent a nice apartment, I have to use it. Say an apartment were $5000/mo. That means I leave town for a birthday party, it just cost me an extra $333 on top of the hotel we stayed at for the bday party. Better to stay in the apartment and only leave when necessary. Same thing with a $900/mo car with $6k down. I may as well sleep inside it to get the most use out of it. How can it sit in a garage or driveway or work parking garage 22 hours per day unused? If I owned it, 20 years is a long time, it's ok to sit idle 22 hours per day, and maybe 18-20 on the weekends.