As new-car prices continue to rise, American consumers are finding affordability in auto leases.
Auto leases accounted for a record high of 27.5 percent of all financed new vehicles in the first quarter of this year, data from Experian’s latest State of Automotive Finance Market report showed.
New-vehicle leasing grew by 12.5 percent to reach the highest level in seven years since Experian, an automotive finance watcher, started monitoring the data. In the same period last year, auto leasing accounted for just 24.4 percent of all new vehicles financed.
Senior Director of Automotive Credit in Experian, Melinda Zabritski, told the CNBC, a credible business news provider, that “Leasing is definitely back.”
Moreover, the report also found that the average monthly payment dropped to $459 from $462 in the first quarter of 2012.
According to Zabritski, leasing is most of the time where consumers get the low monthly payments they can afford to purchase a vehicle. “Consumers tend to shop for vehicles based within the limits of their budget, and leasing is often seen as a viable path to a lower monthly payment.”
Aside from auto leasing itself, consumers seem to have another way of keeping their monthly payments lower.
In the first quarter of this year, auto loans slightly stretched to 65 months in average from 64 months in the same period last year. More than 27 percent of all auto loans in the first quarter are 73 to 84 months, accounting for 19.5 percent of all new vehicles financed.
Leasing as the Easiest Way to Go for Luxury Cars
Experian data also showed that most of the leases were generated by luxury auto makers Mercedes-Benz and BMW.
According to Zabritski, people have been financing new luxury cars through leasing as monthly lease payments are much more affordable.
This, then, have been boosting up the sales of luxury cars. Aside from Mercedes and BMW, auto makers like Cadillac, Porsche, Audi and Lexus demonstrated growth in their sales this year.