Lower payments, shorter trade cycles, improved credit markets and increased sales pressure from the OEM's are all contributing to push vehicle leasing back into the forefront of consumer automotive finance.
Our friend Jennifer Reed of Cherokee Publishing just posted an article "Leasing Opens Back Up as Automakers Seek Higher Sales" that details everything going on in the current auto market.
Just as American car buyers flocked back to "gas guzzlers" when gas prices dropped below $4 per gallon, leasing has always been poised to rebound.
What the article does not touch upon however, is how will the banks respond as OEM's captive finance companies grab more market share through subvented leases?
They would be smart to look at pre-owned leasing. The current wholesale markets are strong and there is virtually no competition - especially from the deep-pocketed OEM's.
Additional leasing resources can be found online at the National Vehicle Leasing Association.
Showing posts with label Auto Leasing. Show all posts
Showing posts with label Auto Leasing. Show all posts
Tuesday, June 22, 2010
Tuesday, May 25, 2010
Auto Dealer Monthly Profiles Car Leasing Done Right
Auto Dealer Monthly's latest issue has a nice report how Boch Honda in Attleboro, Mass. is finding vehicle leasing is coming back in a big way.
www.autobidsonline.com/news/boch_honda.pdf
And although I disagree that residuals have to be inordinately high or subvented by the OEM's to have consumer appeal, Boch is still driving shorter trade cycles, increasing customer satisfaction and realizing bigger back end profits through consumer vehicle leasing.
They and other dealers like them should be a part of the NVLA. Does anyone know Ernie Boch or anyone else at their family of dealerships?
www.autobidsonline.com/news/boch_honda.pdf
And although I disagree that residuals have to be inordinately high or subvented by the OEM's to have consumer appeal, Boch is still driving shorter trade cycles, increasing customer satisfaction and realizing bigger back end profits through consumer vehicle leasing.
They and other dealers like them should be a part of the NVLA. Does anyone know Ernie Boch or anyone else at their family of dealerships?
Monday, May 24, 2010
Used Car Leasing: Yes, You Can Do It - And It's On The Rise
Unbeknown to many consumers is that you can actually lease a used car. And when you think about it, the whole idea makes complete sense.
A 1 year old used car has already encountered the dramatic first year of depreciation. In years, two through four, a car depreciates far less and as a result, you get a great 'new' car for about 20-30% of the money.
According to used leasing expert David Ruggles of the Autos And Economics Blog, used car leasing is the way of the future for many consumers. "In a tight economy, car buyers are looking for new ways to drive more car for their money. A 2010 Infiniti G37 Coupe 2dr Sport can be leased at 48 months for about $575 per month. If you leased a 2009 version of the G37, for 36 months, the lease payment would run about $436 per month - a savings of almost 25%."
And as we move toward the second half of 2010, Art Spinella of CNW Research reports there were almost 80,000 used vehicles leased last month.
Here is more from our friends at Cherokee Publishing: CNW Research Reports Positive April Gains for Used Car Leases
A 1 year old used car has already encountered the dramatic first year of depreciation. In years, two through four, a car depreciates far less and as a result, you get a great 'new' car for about 20-30% of the money.
According to used leasing expert David Ruggles of the Autos And Economics Blog, used car leasing is the way of the future for many consumers. "In a tight economy, car buyers are looking for new ways to drive more car for their money. A 2010 Infiniti G37 Coupe 2dr Sport can be leased at 48 months for about $575 per month. If you leased a 2009 version of the G37, for 36 months, the lease payment would run about $436 per month - a savings of almost 25%."
And as we move toward the second half of 2010, Art Spinella of CNW Research reports there were almost 80,000 used vehicles leased last month.
Here is more from our friends at Cherokee Publishing: CNW Research Reports Positive April Gains for Used Car Leases
Wednesday, April 14, 2010
Good News Continues for Vehicle Lessors
We're getting stories almost every day that used vehicle prices are strengthening and this is certainly great news for vehicle lessors.
Today, we get two stories from our friends at Cherokee Publishing / Auto Remarketing Today:
KBB Sees Strong Used Vehicle Values, Demand Continuing
Ford Reports Resale Values Up 23 Percent
We all know strong resale values mean less residual risk to lessors. With the SAAR improving and strong used vehicle values, how long will it take for regional and national banks to get back into vehicle leasing?
Today, we get two stories from our friends at Cherokee Publishing / Auto Remarketing Today:
KBB Sees Strong Used Vehicle Values, Demand Continuing
Ford Reports Resale Values Up 23 Percent
We all know strong resale values mean less residual risk to lessors. With the SAAR improving and strong used vehicle values, how long will it take for regional and national banks to get back into vehicle leasing?
Thursday, February 25, 2010
Vehicle Leasing Rebounds
Great news on the indirect consumer leasing front. It's been a long way since the crash of July 2008.
Jim Henry reports some green shoots are beginning to show in an article posted at BankRate.com. On the heels of the Toyota debacle, this is certainly great news!
Jim Henry reports some green shoots are beginning to show in an article posted at BankRate.com. On the heels of the Toyota debacle, this is certainly great news!
Tuesday, November 3, 2009
Used Car Prices Remain Strong
Edmunds.com just released a report confirming what Ruggles and I have been touting for several years. The dramatic pullback in new car leasing has resulted in a shortage of off-lease vehicles entering the auction lanes.
As a result, the decrease in used car supply has strengthened their current values and private owners are finding themselves in a stronger equity position.
Whether this will lead to lenders' return to leasing remains to be seen. However, it bodes well for everyone the current automotive market.
As a result, the decrease in used car supply has strengthened their current values and private owners are finding themselves in a stronger equity position.
Whether this will lead to lenders' return to leasing remains to be seen. However, it bodes well for everyone the current automotive market.
Thursday, July 30, 2009
Welcome Back GM
GM's announcement yesterday that they will get back into consumer vehicle leasing is great news. Even if it is only available on their luxury lines, it should spur action with the other captive finance companies and hopefully create a spark with independent banks.
Wells Fargo, Huntington and Fifth Third are three independent banks with a long history of vehicle leasing. Along with virtually everyone else, they suddenly exited the market about this time last year with a rash reaction to $4 / gallon gasoline and Chrysler, GM and Ford's mass exodus out of all or most of their previous leasing program.
The market is in desperate need for new lease funding sources - particularly with late model pre-owned. Unfortunately, most banks' risk managers have unfounded fear about pre-owned leasing (POL).
If they would think about it, a 36 month pre-owned lease on a 1YO vehicle poses LESS residual risk than the same vehicle leased a year ago for 48 months. Both vehicles will come off lease at the same time but the pre-owned lease encountered most of its depreciation under different ownership.
There used to be some legitimate concerns about existing equipment on a pre-owned vehicle - or lack thereof. However, Chrome Data and other vehicle configurators are mitigating much if not all of that risk.
I just don't get the banks' negative views on POL.
Regardless, GM's re-entry into the leasing market is good news. Here's hoping they learn from past mistakes and resist setting unrealistically high residuals.
Wells Fargo, Huntington and Fifth Third are three independent banks with a long history of vehicle leasing. Along with virtually everyone else, they suddenly exited the market about this time last year with a rash reaction to $4 / gallon gasoline and Chrysler, GM and Ford's mass exodus out of all or most of their previous leasing program.
The market is in desperate need for new lease funding sources - particularly with late model pre-owned. Unfortunately, most banks' risk managers have unfounded fear about pre-owned leasing (POL).
If they would think about it, a 36 month pre-owned lease on a 1YO vehicle poses LESS residual risk than the same vehicle leased a year ago for 48 months. Both vehicles will come off lease at the same time but the pre-owned lease encountered most of its depreciation under different ownership.
There used to be some legitimate concerns about existing equipment on a pre-owned vehicle - or lack thereof. However, Chrome Data and other vehicle configurators are mitigating much if not all of that risk.
I just don't get the banks' negative views on POL.
Regardless, GM's re-entry into the leasing market is good news. Here's hoping they learn from past mistakes and resist setting unrealistically high residuals.
Friday, June 26, 2009
The Future of Leasing
Here is my response to Marcie Belle's post at AutoFinanceNews.net:
Marcie - If there’s one component of finance that’s gotten hammered hard in the past year, it’s leasing. Like lenders, lessors have tightened underwriting across the board. What makes things more difficult is the fact that so many lessors have curtailed their businesses or exited the market altogether.
In a nutshell: Fewer providers are offering leases, and of those that remain, qualification standards are tough.
Technically, it would seem that leasing would be a popular option these days, with car buyers seeking the lowest possible monthly payments. But because lessors have reined in residual value estimates, monthly payments are not that much cheaper than loan payments. Put simply: Leasing has lost its edge.
In its heyday, leasing commanded about a third of the financing market. These days, I wouldn’t be surprised if the ratio were closer to 10%.
Will leasing ever rebound? Sure, when the memory of residual value losses fades. For now, though, with financiers scrambling to survive the current new-vehicle-sales nosedive, leasing will remain elusive.
Jeff - The future of leasing is really about closed-end consumer leasing and it should be bright!
Everyone believes that today's lower residuals are such a negative. ALG and RVI have pulled way back and the typical reaction is that a consumer will never go for a lease when the payments are not artificially low. That is far from the case - IF the dealer knows how to sell a lease properly. And that's a very big "if" because not many do.
When residuals are high, a blind dog can sell a lease. But this short-term gain has proven to be a loser for everyone at lease end. Lenders lose at termination, dealers lose a now distrusting customer and the customer looks at his next car's higher lease payment and eschews the lease for a 72 or 84 month retail payment.
Where is the logic in that? And why is it that consumer leasing companies like D&M Leasing in DFW are still leasing 500+ cars per month?
The few leasing lenders that remain would be well served to re-educate their dealers on how a more realistic residual is GREAT for the consumer. Those that are not in the game today have a perfect opportunity to get back in, with realistic residual values and unprecedented opportunity.
Too often we forget that the real value of leasing occurs at end of term. Lenders are scared to death of lease returns but today’s ultra-conservative residuals mitigate that risk. Not entirely but we are certainly much better protected than years past.
And even with higher payments, the lessee has valuable options at termination. He can sell it for a profit, turn it in, re-lease it (if there are any lenders out there who understand the value of POL) or buy it out right. If he “owns” the car on a 72 month installment contract, he’s going to be driving the car much longer than most consumers would like or he’s going to take a real bath when he gets sick of it in 3-4 years.
Leasing has never been right for everyone but it is certainly a great option for those who do not drive the wheels off their cars.
The real question is, are there any lenders out there who still get it and are they willing to re-train the dealers who are missing the boat?
Marcie - If there’s one component of finance that’s gotten hammered hard in the past year, it’s leasing. Like lenders, lessors have tightened underwriting across the board. What makes things more difficult is the fact that so many lessors have curtailed their businesses or exited the market altogether.
In a nutshell: Fewer providers are offering leases, and of those that remain, qualification standards are tough.
Technically, it would seem that leasing would be a popular option these days, with car buyers seeking the lowest possible monthly payments. But because lessors have reined in residual value estimates, monthly payments are not that much cheaper than loan payments. Put simply: Leasing has lost its edge.
In its heyday, leasing commanded about a third of the financing market. These days, I wouldn’t be surprised if the ratio were closer to 10%.
Will leasing ever rebound? Sure, when the memory of residual value losses fades. For now, though, with financiers scrambling to survive the current new-vehicle-sales nosedive, leasing will remain elusive.
Jeff - The future of leasing is really about closed-end consumer leasing and it should be bright!
Everyone believes that today's lower residuals are such a negative. ALG and RVI have pulled way back and the typical reaction is that a consumer will never go for a lease when the payments are not artificially low. That is far from the case - IF the dealer knows how to sell a lease properly. And that's a very big "if" because not many do.
When residuals are high, a blind dog can sell a lease. But this short-term gain has proven to be a loser for everyone at lease end. Lenders lose at termination, dealers lose a now distrusting customer and the customer looks at his next car's higher lease payment and eschews the lease for a 72 or 84 month retail payment.
Where is the logic in that? And why is it that consumer leasing companies like D&M Leasing in DFW are still leasing 500+ cars per month?
The few leasing lenders that remain would be well served to re-educate their dealers on how a more realistic residual is GREAT for the consumer. Those that are not in the game today have a perfect opportunity to get back in, with realistic residual values and unprecedented opportunity.
Too often we forget that the real value of leasing occurs at end of term. Lenders are scared to death of lease returns but today’s ultra-conservative residuals mitigate that risk. Not entirely but we are certainly much better protected than years past.
And even with higher payments, the lessee has valuable options at termination. He can sell it for a profit, turn it in, re-lease it (if there are any lenders out there who understand the value of POL) or buy it out right. If he “owns” the car on a 72 month installment contract, he’s going to be driving the car much longer than most consumers would like or he’s going to take a real bath when he gets sick of it in 3-4 years.
Leasing has never been right for everyone but it is certainly a great option for those who do not drive the wheels off their cars.
The real question is, are there any lenders out there who still get it and are they willing to re-train the dealers who are missing the boat?
Thursday, April 23, 2009
Lease Your Way Out Of Debt
It amazes me how so-called educated and informed writers still cannot see the forest for the trees.
I read yet another article in today's Dallas Morning News talking about how "many auto finance companies stopped offering (leasing)."
While this is true, you can still lease almost every new vehicle on the market and most pre-owneds three years old or less. That's right. You can lease pre-owned vehicles too!
In today's tightening economy, many are looking to free up cash to keep up with monthly bills. And while shunning your car payment completely makes sense for some, it is simply not practical for many.
So if you are going to have a car payment, why not look at a lease? Here is just one example:
A $30,000 new Altima with a 2.9% APR will cost you $662.70 per month. Compared to a similarly priced used car at 7.0% and its $718.38 payment, this is seemingly a no-brainer.
However, when you look at a 3 year lease, your payment of $513.32 is 23% less.
If you are the kind of driver who is always trading your car before you pay it off, you should really look at a lease.
Use the savings to pay down your higher-interest debt and enjoy a new car every three years to boot.
Now THAT is a no-brainer!
NOTES: For more information on great lease deals, look to our friends at D&M Leasing (www.dmautoleasing.com). Based in Texas, they lease hundreds of vehicles a month to customers throughout the US.
I read yet another article in today's Dallas Morning News talking about how "many auto finance companies stopped offering (leasing)."
While this is true, you can still lease almost every new vehicle on the market and most pre-owneds three years old or less. That's right. You can lease pre-owned vehicles too!
In today's tightening economy, many are looking to free up cash to keep up with monthly bills. And while shunning your car payment completely makes sense for some, it is simply not practical for many.
So if you are going to have a car payment, why not look at a lease? Here is just one example:
A $30,000 new Altima with a 2.9% APR will cost you $662.70 per month. Compared to a similarly priced used car at 7.0% and its $718.38 payment, this is seemingly a no-brainer.
However, when you look at a 3 year lease, your payment of $513.32 is 23% less.
If you are the kind of driver who is always trading your car before you pay it off, you should really look at a lease.
Use the savings to pay down your higher-interest debt and enjoy a new car every three years to boot.
Now THAT is a no-brainer!
NOTES: For more information on great lease deals, look to our friends at D&M Leasing (www.dmautoleasing.com). Based in Texas, they lease hundreds of vehicles a month to customers throughout the US.
Wednesday, April 15, 2009
The Best Time Ever?
Quick question: Is now the right time to buy a car?
On this, 2009’s tax day, the national economy is a mess and most question the logic of making a major purchase.
Yet now might very well be the best time ever to buy a new car – IF you can obtain financing.
Most analysts are pointing to the fact there are fabulous deals in this buyer's market. So long as you know where to look and you have a reasonably good and steady financial set up, you can find a great deal on just about anything you want.
The volatility of gas prices and the struggling economy have caused sales to fall and they have fallen faster than automakers have been able to cut production. The result is that dealers are left with burgeoning inventory and they are quite eager to sell.
Estimates for new vehicle sales are still way off compared to recent history. This is noted as the worst rate since World War II but it has a very positive side as well.
In the current market, most anyone can find what they want with a bit of patience. Dealers lots are overflowing with vehicles they’ve been floor-planning for 100’s of days. In fact, the only type of vehicles they are likely to run out of any time soon are pickups and large SUVs which were shunned so quickly in the face of $4 / gallon gasoline.
Certainly, GM and Chrysler are facing financial difficulties serious enough to threaten their very existence. Ford and the others are not far behind. However, you can still find a good deal on a car that will retain its value for many years, allowing you to make a successful sale or trade-in when you decide to get your next new car. You should also look at leasing which will eliminate this risk altogether.
You can make the most of the current climate with AutoBidsOnline.com. Select your vehicle down to the last option and name your price. Dealers who are hungry to make additional sales will compete for your businesss.
By reaching out to dealers through AutoBidsOnline, you dramatically minimize the legwork involved in the deal process and dramatically decrease the risks you face as a potential car buyer.
With AutoBidsOnline, you make it easier for dealers to come to you with the best offers, eliminating the need to reveal personal information.
If you need a new car, there are many reasons to buy now.. Make the most of a true buyer’s market by finding great deals at AutoBidsOnline.
On this, 2009’s tax day, the national economy is a mess and most question the logic of making a major purchase.
Yet now might very well be the best time ever to buy a new car – IF you can obtain financing.
Most analysts are pointing to the fact there are fabulous deals in this buyer's market. So long as you know where to look and you have a reasonably good and steady financial set up, you can find a great deal on just about anything you want.
The volatility of gas prices and the struggling economy have caused sales to fall and they have fallen faster than automakers have been able to cut production. The result is that dealers are left with burgeoning inventory and they are quite eager to sell.
Estimates for new vehicle sales are still way off compared to recent history. This is noted as the worst rate since World War II but it has a very positive side as well.
In the current market, most anyone can find what they want with a bit of patience. Dealers lots are overflowing with vehicles they’ve been floor-planning for 100’s of days. In fact, the only type of vehicles they are likely to run out of any time soon are pickups and large SUVs which were shunned so quickly in the face of $4 / gallon gasoline.
Certainly, GM and Chrysler are facing financial difficulties serious enough to threaten their very existence. Ford and the others are not far behind. However, you can still find a good deal on a car that will retain its value for many years, allowing you to make a successful sale or trade-in when you decide to get your next new car. You should also look at leasing which will eliminate this risk altogether.
You can make the most of the current climate with AutoBidsOnline.com. Select your vehicle down to the last option and name your price. Dealers who are hungry to make additional sales will compete for your businesss.
By reaching out to dealers through AutoBidsOnline, you dramatically minimize the legwork involved in the deal process and dramatically decrease the risks you face as a potential car buyer.
With AutoBidsOnline, you make it easier for dealers to come to you with the best offers, eliminating the need to reveal personal information.
If you need a new car, there are many reasons to buy now.. Make the most of a true buyer’s market by finding great deals at AutoBidsOnline.
Tuesday, April 7, 2009
Leasing Versus Buying: What Should You Do About Your Next New Car?
When you’re looking for your next new car, consider your lease versus buy options.
Leasing is often thought of in negative terms but for many, it is far from it!
Do you frequently trade in your car every three or four years? Are you interested in driving more car for less money? Do you neglect to service your car as it gets older, or worse, find yourself cash-strapped and not able to afford the increased maintenance required by older cars?
If you answered yes to any of the above, you should consider leasing!
After all, unless you pay cash for your car, you never really own it until you pay it off. The bank does. And with car prices rising, installment loans are being written for longer terms - often times as many as 72 or even 84 months.
Study the amortization schedules on these lengthy loans and you will see that it can be as much as five years or more before you are no longer “upside-down.”
“But I can’t lease, I drive too many miles,” is something I often hear from friends. Yet the fact of the matter is the impact of how many miles you drive per year is the same whether you lease, pay cash or use traditional finance. You will still be upside-down for approximately 60 months. If you choose to trade out of your car before then, you will take a hit on your trade-in value – regardless of your method of finance.
Lease Assumption is another option to consider. Sites like SwapALease.com put potential buyers with lease “sellers.” You can often pick up a near-new, previously leased vehicle with 8-36 months remaining on the original lease for pennies on the dollar.
Not interested in driving someone else’s car? Try an independent leasing company like D&M Leasing in Texas (www.dmautoleasing.com). D&M specializes in finding any make, any model and any style car for thousands of customers across the country. They leverage their buying power to provide customers with affordable leases without ever setting foot on a dealer’s lot. They can even arrange multiple test drives on the same day so you can compare similar vehicles at the same time!
Next to “buying” and trading a new vehicle every three to four years, leasing is often the more cost-effective option. In many cases, you can save as much as 40-50% off of a comparable installment loan.
When you are considering the “purchase” of your next new car, check out D&M and SwapALease. You’ll be glad you did!
Leasing is often thought of in negative terms but for many, it is far from it!
Do you frequently trade in your car every three or four years? Are you interested in driving more car for less money? Do you neglect to service your car as it gets older, or worse, find yourself cash-strapped and not able to afford the increased maintenance required by older cars?
If you answered yes to any of the above, you should consider leasing!
After all, unless you pay cash for your car, you never really own it until you pay it off. The bank does. And with car prices rising, installment loans are being written for longer terms - often times as many as 72 or even 84 months.
Study the amortization schedules on these lengthy loans and you will see that it can be as much as five years or more before you are no longer “upside-down.”
“But I can’t lease, I drive too many miles,” is something I often hear from friends. Yet the fact of the matter is the impact of how many miles you drive per year is the same whether you lease, pay cash or use traditional finance. You will still be upside-down for approximately 60 months. If you choose to trade out of your car before then, you will take a hit on your trade-in value – regardless of your method of finance.
Lease Assumption is another option to consider. Sites like SwapALease.com put potential buyers with lease “sellers.” You can often pick up a near-new, previously leased vehicle with 8-36 months remaining on the original lease for pennies on the dollar.
Not interested in driving someone else’s car? Try an independent leasing company like D&M Leasing in Texas (www.dmautoleasing.com). D&M specializes in finding any make, any model and any style car for thousands of customers across the country. They leverage their buying power to provide customers with affordable leases without ever setting foot on a dealer’s lot. They can even arrange multiple test drives on the same day so you can compare similar vehicles at the same time!
Next to “buying” and trading a new vehicle every three to four years, leasing is often the more cost-effective option. In many cases, you can save as much as 40-50% off of a comparable installment loan.
When you are considering the “purchase” of your next new car, check out D&M and SwapALease. You’ll be glad you did!
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