The Latest Car Leasing Trends

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Is Buying a Better Option Today?
The year 2022 saw some big changes in auto leasing. Car leasing hit a modern-day peak in the midst of the Covid pandemic, reaching 34 percent of the new car market in 2019 according to Kelley Blue Book. A third of car shoppers chose to lease their new cars. But since then, car leasing has been on a downhill slope and today, less than 19 percent choose to lease rather than purchase a vehicle. What is driving this change? Let's find out.
 What's your Lease Car worth today?
In a lease, you are paying for the vehicle's depreciation while you are driving it. The car's residual value is the estimated amount the lease car is worth at the end of the lease. The lease company figures out the residual value at the beginning of the lease. However, if you leased a car back in 2019, your lease car is likely to be worth much more today than when you leased it. The residual value of the same make and model of car today is higher than when you leased the car and that means you can save money by buying that lease car.

Due to high demand, new and used car prices rose quickly in 2021 and continued to rise in 2022. If you leased a car in 2019, its value as a used vehicle is now worth approximately 42 percent more than when you leased it. That makes the idea of buying that car at the end of the lease very attractive. Add in the fact that automakers today are making more money from selling new cars than leasing them and you have a scenario where some manufacturers are not offering very exciting lease terms for 2023.

Rising Used Car Prices

Today's car buyers may discover that due to a shortage of lease cars that are available, as well as higher interest rates and higher vehicle prices, the monthly payments to buy a new car may actually be lower than the payments to lease. For instance, a year ago, the average monthly car lease payment was $500. As of this writing at the end of 2022, the average car lease payment is $650.
Plus, with more people buying their three-year-old lease cars rather than returning them, there are fewer used cars from the lease pool going to used car lots. Since many leased cars that are returned are only three years old and have been gently used, they often go to the popular "certified pre-owned" market.
Overall, these factors keep the demand high for used cars and makes getting a killer deal on a used car more difficult to come by. According to industry experts, this trend is likely to continue for at least the next few years. Jessica Caldwell, executive director of industry analysis for Edmunds says, "Three years ago, leasing was an affordable option for almost anyone considering a new vehicle, but the market has made a pretty dramatic shift since then." That shift is actually leading people to consider buying over leasing a new car, now more than ever.
Let Lithia Help
With over 75 years of experience in the personal transportation industry, Lithia Motors is here to help get you into your next vehicle no matter if you are looking for a new, used, or certified pre-owned car, truck, or SUV. Whether you are interested in buying or leasing, we can set you on the road to your next driving adventure. Find the Lithia Motors dealership near you right here.