Following financial news is about as invigorating as watching cantaloupe ripen, which is why the vast majority of us don’t include it as a regular pastime.
Financial developments, though, can have lasting impacts on our lives and affect the ease with which we buy houses, cars, and other items that typically require financing. Trends in the automotive finance industry can also provide a glimpse into the future of car prices and help us find the perfect timing for purchasing a new or used car.
With that in mind, we have some interesting news to share from Ally Financial, formerly GMAC, that might be good news for used-car shoppers who love to take home a great deal.
The news is not so great if you’re an automaker, a dealership, or the CEO of Ally. Continue reading >>>
A burgeoning number of leasers will return their cars over the next six months, and their number is bound to grow even further as leasing continues to be a popular alternative to buying a new car.
Experian Automotive, citing AutoRemarketing.com, says 1.8 million cars will be coming off lease between the end of April and December.
I had a flip phone until about two years ago. You know the kind… the phone rang, I flipped it open to talk and slammed it shut when done. If I wanted to text, I pushed the individual number buttons until reaching the appropriate letter.
I held on to that phone through the introduction of the iPhone, then the second iPhone, then the iPhone 3G. I stayed true to my phone as the iPhone 4 came and went. Finally, when the 4S came out, I reluctantly caved in and committed to a new two-year relationship with the iPhone 4. It didn’t take long before I had to have 4S. Now I’ve got my eye on the 5.
I’ve fallen into the upgrade trap, which is now extending into the world of auto retailing.
People are discovering the car lease all over again.
That’s a great thing, because it means more new cars are moving off dealer lots, more people are driving nice cars at reduced rates, and the used market benefits from high-quality lease returns. There really aren’t any losers in the car lease world, except the people who lease when they shouldn’t.
The one drawback to leasing? Lease customers never do pay off their cars, meaning they always have a car payment and own nothing at the end of a lease.
For a lot of people, though, that makes sense.
“Son, don’t ever lease a car. It’s never a smart decision. You’ll lose money, and you’ll never be able to break the cycle once you start. You’ll have a car payment forever.”
That was my dad’s advice to me ever since he started giving me car advice. That and, “Never buy a Chrysler. Unless you want the engine to blow up.”
Fast-forward a couple decades, and I find out my parents got a new car, a 2012 Subaru Legacy. Then the kicker: “We got a really low lease payment on it,” my dad said.
I just about blew some perfectly good rum and Coke right out my nose.
Car leasing has staged a comeback over the last couple years.
If you leased a new car recently, or plan to, you’ll eventually reach the end of the agreement and face a decision: end the lease or purchase the vehicle. If you are in love with the car and want to keep it parked in your driveway instead of exchanging it for a newer model, be prepared to do some research. Remember, while it will feel like “your” car, it’s really still a used car, and you need to make sure you’ll get a good deal if you choose to buy it.
When you sign a lease, there is a “purchase option price” written into it somewhere. This price is set by the leasing company and represents the estimated residual value of the car at the end of the lease. That price plays a huge part in setting the monthly payments on a leased vehicle, which are calculated as the difference between the vehicle’s sticker price and its estimated value at the end of the lease. Is buying the car at lease-end a good deal?
Why would you buy (rather than lease) something that depreciates as fast as most automobiles? I have never understood the extraordinary need, often a compulsion, that Americans have to own things.
It used to make sense in the housing market, when everyone thought prices would rise forever. We know how that turned out.
The only sensible reason to own a car is the need to drive it more than 15,000 miles a year (the limit in most leases, and overage charges are steep). Or if it has an especially low depreciation rate (i.e., high quality) and you plan to keep it a long time. Or if you got a very attractive deal on a used car. Our listings can lead you to some.
Used car prices are high right now in part because new-car prices just keep rising. Leasing can help beat the high cost of driving, because basically, you pay only for the portion of the car’s lifetime cost that you use. Of course, there are advantages and disadvantages. You need more than ever to be a smart buyer, and there is some good advice here and an explanation of leasing terms here.
We found some very attractive current lease deals, which we’ll pass along, plus a few that are kind of ridiculous.