As the price of new vehicles continues to rise, leasing is becoming a more popular option.
At the beginning of 2010, the credit market began to stabilize and leasing, which was very popular in 2006-07 before it took a nose dive in 2008, has made a comeback, said John Sternal, vice president of LeaseTrader.com.
"Leasing is on its way back. About one third of vehicles are leased in a healthy economy," Sternal said. "Between 15 and 20 percent of all vehicles sold are leased, that is up from 9 percent before the credit collapse."
(Mirror photo illustration by J.D. Cavrich and Tom Worthington II)
Sales Manager Tim Edmundson Sr. goes over a customer’s paperwork on a new car lease on Wednesday at the Dean Patterson Chevrolet Cadillac Mazda Hyundai dealership at 101 Pleasant Valley Blvd., Altoona.
Many local dealers said they are seeing an increase in leasing.
"Last January we did one or two. This January we did between 10 and 15 leases. In February, we were up to about 20 leases," said Bob Bradley, sales manager at Courtesy Ford Kia, Altoona. "Leasing is an attractive way to buy a car again; it is a good deal for the customer."
Greg Sloan, general sales manager at Five Star Suzuki, Altoona, is also seeing an increase in leasing.
"We have some favorable leasing programs. That certainly helps," Sloan said. "All leasing is is an alternate method of financing; it is not for everybody, but it is a good program for many."
Most leases today are for two or three years with four years the maximum.
"The days of long-term leases are over," Bradley said.
Dealers said leasing is advantageous.
"Leasing tends to be a win-win," said Eric Noll, sales manager of Blair Honda, Altoona. "The customer gets a new vehicle every other year or so, and the dealer has low-mileage vehicles to sell when they are returned."
"You will use the most useful life of the car, and it is still under full factory warranty," Bradley said. "If you lease for three years and turn it back, you can get another car and start the process over again."
Leasing can give the customer a lower monthly payment than if he or she purchases a new vehicle, which depreciates after the purchase.
"You get into a shorter term so you can trade more often. It gets you in a new vehicle every two or three years rather than six years for about the same payment," said Tim Edmundson, sales manager at Dean Patterson Chevrolet Cadillac Mazda Hyundai. "There is an old philosophy that you buy things that go up in value and lease things that go down in value."
Bradley is a big proponent of leasing.
"I am in the car business and all of my personal vehicles we have leased over the last 15 years," Bradley said. "If it was not a good deal, I wouldn't do it."
Leasing is not for everyone.
"If you are driving excessive miles, you may not want to lease and it may be best to buy," Sloan said. "If you drive 20,000 to 22,000 miles a year, you can still lease the car and pay for the miles up front or at the end."
"The bottom line is are you going to drive a lot and do you want a different car every three or four years," Sternal said. "If your answer is 'no' to the first and is 'yes' to the second, you should consider leasing - you can get more car for your money from a monthly payment standpoint."
Once the lease runs out, the customer has options.
"The first option is to keep it; you are not obligated to keep it," Sloan said. "You also have a choice if it is worth more than you owe: You could buy it and sell and keep the equity."
The vehicle will be examined when you return it.
"At the end of the lease, the car is evaluated. If it has excessive damage, you will pay for it," Sloan said. "If you have bald tires and some big dents, the lease company will look at it. I have never had anything like that happen here; most people bring them back in good condition."
Dealers help customers try to determine whether it is best to lease or buy.
"Look at the payments and what you can afford," said Matt Stuckey, president of Stuckey Ford and Stuckey Subaru, Hollidaysburg. "The advantage of leasing is your payments are less over a short term."
Customers should make sure they read the agreement before they sign it.
"You need to check the fine print because there may be fees due at signing," Noll said. "Anytime a manufacturer advertises a specific fee, you need to read the fine print to see how they got to that amount."