Santa Monica, Calif.— According to Edmunds.com automobile leasing is on the rise, up 21 percent from last year.
“As interest rates rise, leasing is becoming a more attractive option for consumers,” said Alex Rosten, manager of pricing and market analysis at Edmunds.com. “Leasing allows car buyers to have lower monthly payments and get better ‘bang’ for their buck.”
Edmunds.com is the only Web site to identify the best lease deals using a numerical formula rather than subjective opinion. The calculation takes into account the average transaction price of the car and then determines the savings provided by the lease.
Deciding whether to buy or lease is confusing for many consumers,” said Philip Reed, senior consumer advice editor at Edmunds.com and co-author of Edmunds.com’s Strategies for Smart Car Buyers. “We recommend leasing to consumers who want to switch cars every two or three years. Buying is better for people who plan to keep their cars through the life of their loan and beyond.”
Reed recommeds that consumers who are still unsure which path to choose should take advantage of the tools on Edmunds.com such as the Buy vs. Lease Calculator and the Leasing Quiz.
Reed also provides the following tips for consumers who are considering leasing a vehicle:
1. Limit your down payment: Contrary to popular belief, down payments are not necessarily required for leases. Down payments will help to lower monthly lease payments, but it is typically in the consumer’s best financial interest to put little or no money down to fully benefit from leasing’s low finance rates.
2. Negotiate your mileage limit: Leases include a maximum number of miles that the car can be driven without incurring a surcharge, and that maximum is negotiable. The average consumer drives approximately 14,000 miles per year. Make sure your lease mileage limit matches your needs. Additional miles can cost up to 35 cents per mile, which can become a major expense.
3. Negotiate the price of the car: Monthly payments are normally calculated based on the assumption that the car’s value is the manufacturer’s suggested retail price (MSRP). Negotiate using the Edmunds.com True Market Value for a fairer and typically more affordable monthly payment.
4. Shop around: Not all lease deals are heavily advertised. The automakers’ national and regional lease programs can be researched at no charge within Edmunds.com’s Incentives and Rebates database. Individual dealerships can offer further discounts. Shop around for the lowest monthly payments and upfront costs.
5. Make apples-to-apples comparisons: Leasing can be confusing because there are so many factors to consider: down payment, monthly payment, term of lease, allowed mileage, drive-off fees, interest rates. Evaluate all the factors as you compare and make a decision.