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Pay is getting cheaper yet vehicles are getting more expensive. Rents, Property Taxes, Utilities, I guess this is motivating more people to lease a vehicle, right? What have you seen?
Another trouble, though... -- The "Automotive Repair Conspiracy..."
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I did leasing once, as usual I was not the most informed or money wise person at the time. The lease payment gave me a car I could not afford and had consequences. It was a 26k car sticker when reality was I could afford a 12-13k car.
Don't fall for the low payment it will get you in the end.
Nah... I never lease. Being a Mech Eng I know how to buy a good used car that's so economically depreciated... Then I know how to fix them and keep them running. And I don't buy automotive nightmares to repair.
72 month financing is the new norm while 84 month financing is the new "Extended" period financing. Scary to think people are taking 7 year notes out on vehicles, but it's a lot more common than you think. According to Bankrate, 62% of all loans in 2014 were longer than 60 months, and 23% were 72 - 84 month notes. That was in 2014...expect that to be even higher currently. Yikes.
That being said, leases are still common and are still very good values *IF* you know how to shop for a lease. Some vehicles lease extremely well (BMW for instance), while some lease EXTREMELY poorly (Alfa Romeo for instance). Sadly, I don't think the majority of people who lease fully understand the terminology or the math to get to the final monthly payment number. All they see is a number they are OK with, and that's where most people get ripped off and give leases the bad name they have.
Leasing started getting popular in the late 80s. There are often tax advantages to leasing, especially if you own your own business. I don’t know what method is used more often.
My wife likes leasing because she gets bored of her car after a few years and likes to get a new and different one. I usually buy, but this time I leased because the car I decided on, does not have a good reliability track record. I negotiated a decent buy out price though.
Majority of Luxury cars over $40k are all leased. It makes no financial sense to buy them unless they hold value really well like a Lexus. Almost all German cars lose 1/2 the value in just 2-3 years, it would be a huge mistake to own them outright.
Most people that are driving for Uber or Lyft are also leasing which is another stupid mistake to do since they have clauses and terms that forces you to keep working for them or else if you back out the lease or they cancel the lease you are subject to a huge opt-out fee.
72 month financing is the new norm while 84 month financing is the new "Extended" period financing. Scary to think people are taking 7 year notes out on vehicles, but it's a lot more common than you think. According to Bankrate, 62% of all loans in 2014 were longer than 60 months, and 23% were 72 - 84 month notes. That was in 2014...expect that to be even higher currently. Yikes.
That being said, leases are still common and are still very good values *IF* you know how to shop for a lease. Some vehicles lease extremely well (BMW for instance), while some lease EXTREMELY poorly (Alfa Romeo for instance). Sadly, I don't think the majority of people who lease fully understand the terminology or the math to get to the final monthly payment number. All they see is a number they are OK with, and that's where most people get ripped off and give leases the bad name they have.
Yes, I think this is the new normal more than leasing. BUT, cars are lasting a lot longer.
I don't think leasing is more common than before, but I haven't seen any long term data to support that. I know that it is up in the short term, but that isn't really relevant considering the economic history of the last 10 years.
Chrysler/Dodge couldn't paper their own cars for a number of years after the bailout, and the same was true of GM. Chrysler got burned on the leasing end when for years, they would send leases out with artificially high residual values, and then get burned selling them at auction for thousands less. The same was true with GM.
I think, (and someone with more knowledge of the industry can correct me) that automakers are becoming more confident setting higher residual values. With higher residual values, they can charge a higher money factor and realize greater profits for their lending operations. Providing the wholesale values don't fall significantly below the residuals, all will be well. Of course, if the car has a residual of $15K and its selling for $11K all day at the auction, they will have to pay the piper in due course.
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