It’s an option you’ve probably come across but probably haven’t seriously considered, especially over this past year. the number of Americans who are leasing new vehicles has dipped down to unexpected rates. Some analysts, however, think that this might change over the next couple of years. When it comes to shopping for new cars for sale at an affordable price, shopping for leased vehicles at your local dealer might be an idea worth considering for 2023.
How Do Leased Vehicles Fit in the Automotive Landscape?
Leased vehicles help funnel the certified pre-owned vehicle market. Most dealerships have a fleet of certified pre-owned cars for sale on their lots. For drivers who want to shop confidently and don’t necessarily want to purchase a brand-new vehicle, certified pre-owned models are a great fit. These low mileage vehicles are often returned within their warranty year, are still functioning like new, and meet the high standards and demand many drivers want.
However, because lease car deals have been dipping over the past couple of quarters, there isn’t a replenishment in the certified used auto market. In turn, this has pushed many drivers to either make the leap into a new vehicle or drop some of their wants and shop used models.
Why Aren’t Americans Leasing Vehicles
It’s no secret that getting into a vehicle you can count on can be expensive. According to a report from the U.S. PIRG Education Fund and Frontier Group, 85% of new car shoppers take out an auto loan for their new vehicle purchase. Additionally, since 2009, the total auto debt carried by America has grown over 75% with Americans owing over $1.2 trillion in auto loans.
One way drivers have circumvented these expensive car prices is by leasing a new vehicle. On average, leased vehicles account for a third of automotive sales each year. As of last year, however, that number dropped to an unexpected 19%.
There are many reasons for this sudden drop, but analysts are able to point to common factors. A supply crisis in the new car market has been driven by a lack of important car parts including semiconductor chips. In return, the supply franchise has driven up the cost of new vehicles, also driving up the cost of lease agreements. For some drivers, it’s simply more cost-effective to shop used for now.
Higher interest rates have also pushed shoppers out of the leased car market this past year. With interest rates more than doubling over the past couple of years, many drivers are still waiting to get into a vehicle they love and can afford.
How the Lease Vehicles Market Could Change in the Coming Years
Luckily, there is stability on the horizon, and this renewed stabilization could push consumers back into the leased car space. However, the issue of interest rates still has many shoppers waiting. In some situations, however, higher interest rates could encourage drivers in need of a vehicle immediately to look at leased cars if they are not yet ready to commit to a new or used car purchase.
Dealers have taken notice of this complicated auto market and many are getting creative in their lease car agreements. Lease Here Pay Here programs, leasing specials, and other financing options could all be ways lease car rates may rise again in the coming years.
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