More and more car buyers are leaving their dealerships with leases rather than financing.
According to a recent report by Experian Automotive, 31.46 percent of new vehicles financed in the first quarter were leased, an all-time high in the U.S. Five years ago, the number of vehicle leases was 24.05 percent.
With vehicle prices climbing to all-time highs, Americans are taking advantage of leases to get into a vehicle while keeping their monthly payments as low as possible. The report also found that the average new vehicle lease monthly payment in the first quarter was $405, compared to the average monthly payment of a new vehicle loan that was $488. Additionally, the average monthly financed payment for those buying new vehicles was up $14 compared to last year, while lease payments actually dropped $7.
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Those financing vehicles are also opting for longer loans, likely due to lower interest rates. A record 29.5 percent of those that took out a new vehicle loan stretched it out between six to seven years and the report also found an 18.6 percent increase in new vehicle loans with terms between 73 and 84 months. The average amount financed for a new vehicle loan in the first quarter increased nearly $1,000 to a record high of $28,711, in line with the average vehicle transaction price climbing above $31,000.
“Leasing has become more popular because the price of vehicles continues to go up,” said Melinda Zabritski, senior director of Experian Automotive. “Consumers are looking for lower monthly payments, which is why more of them are extending the terms of their loans.”