POSTED: Wednesday, September 4, 2013 - 6:28pm
UPDATED: Thursday, September 5, 2013 - 8:33am
We are headed for a nearly 16-million vehicle sales year in North America.
And surprisingly, for the first time in a long time, we are leasing vehicles.
It has been a banner year for car sales.
In August all of the Detroit Big 3 sales were up by double digits versus last year.
And if you were walking through a new car lot 10 or 15 years ago, and you found one you wanted…your big question would be, buy or lease?
The folks at Experian, the credit rating agency, have been tracking our auto buying trends.
Leasing has hit an all time high of 27% of all car transactions.
Leasing tends to have lower monthly payments. Consumers on average tend to spend $50 less on a new lease than a new loan.
And if you are in the car business, one thing is clear. Leasing is back. And there are reasons for that.
"Now residuals are back and they are actually putting some pretty stout residuals on,” says Monty Hall of Hall Buick/GMC. “And what a residual means is the value of that car at the end of the lease. If that is higher, then it affects the lease payment. The lease payment is lower. And the manufacturers are all pushing that. They understand it. They want to keep people in their vehicles. We want to keep them in new Buicks and GMC's and coming back for new Buicks and GMC's it's good for everybody all around."
And if you are buying, the era of the 36 month loan is gone.
What's the most common car loan today? Around that 72 months. 72 has become the new 60.
And again…the reason is cars are pricier and money is cheaper.
Add to that the improving economy and pent up demand, and you have a perfect storm.
And let’s don’t leave out ego.
You can get more car leasing than buying.
"But if you're like a lot of people,” Hall said, “putting 12-15,000 miles a year on a car, and you like to have a new car all the time, a low lease payment might be the ticket."