Getting a new car every few years may be great for the consumer, but recent economic conditions are hurting the finance companies backing your loan, like GMAC, Washington Mutual and Wachovia, making leasing less of an option.
“What you have today is a lot of companies saying they’re losing money through leasing because the residual values are falling and they’re having a hard time projecting those values,” said a LeaseTrader.com executive.
When you lease a car the finance company buys the vehicle and sells it once the lease is done. As the customer, you send in monthly payments to cover the cost of the vehicle during the time it is leased, and of course some profit for the finance company.
Because of gas prices, the value for SUVs and trucks has fallen because demand has gone down. The financial companies that sell the lease are no longer able to sell for a profit and in many cases end up losing the money. As a result, credit arms and many companies involved are getting out of the leasing business altogether. The companies still in leasing will most likely raise the rates for SUVs and trucks.
But don’t expect leasing to disappear in the long run. According to LeaseTrader.com, there are still 15 million leased vehicles on the road in the United States.
Industry experts see the current leasing pullback as nothing more than a reaction to current market conditions, and that it won’t last forever.
This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com