The average monthly payment for leasing a car has been declining in recent months, according to data released by Swapalease.com, an online marketplace for auto leases.
The drop — $572.42 now, versus down an average of $590.38 in August — stems from “aggressive lease deals and increased incentives offered on leases since 2012,” a news release from the company said. Among the most popular models leased, the average monthly payment on a Chevrolet Cruze declined most, from $428.24 in January 2013 to the current average of $342.17. Leasing a fuel-efficient model is an even better deal, with the average monthly payment for a Chevrolet Volt lease dropping to $256.13 in January from $290.48 a year earlier.
Other data points show a similar trend. The most recent data from the Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool (from the third quarter of 2013), put the average monthly lease payment on a new car at $404, down from $409 in the third quarter of 2012. In contrast, Experian Automotive reported the average monthly payment on a new car loan increased over the same period, from $452 in third quarter 2012 to $458 in 2013. (The average loan term increased from 64 to 65 months in that time frame.) On the other end of the spectrum, the average monthly payment for a used car was $350, about the same as the year before.
Leasing has grown in popularity recently, making up slightly more than 27% of new-vehicle financing, up from about 24% in third quarter 2012, according to the Experian data. But it has been easier for consumers to access vehicle financing, with the average credit scores of people getting leases and new auto loans and trending downward.
Buy or Lease?
Having an auto loan in your credit profile can help diversify your credit history and help you establish a positive payment history (assuming you make payments when they’re due). So what product should you choose? That depends on personal preferences, like how long you want to keep the car, how much you want to pay and whether you want the option to sell the car later.
As far as qualifying for financing, auto leases are considered products for consumers with great credit. If you’re attracted to the idea of leasing a new car, the first thing to consider is whether you’re likely to be approved. Before hitting the dealerships — no matter what you’re looking for — you need to look at your credit scores and credit reports. The average credit score of consumers with new leases in the third quarter of 2013 was 760. For new loans, it was 749 (using the old Vantage scale, which has since been updated).
Checking credit reports allows you to make sure everything is accurate (no one wants financing to fall apart because of a mistake in the paperwork), and your credit scores will give you an idea of what range of credit scores you are in. You can get this information for free, using tools like the Credit.com Credit Report Card and getting your reports from each of the major credit reporting agencies.
More on Auto Loans:
- Are There Car Loans for People With Bad Credit?
- What to Do If You Can’t Make Your Car Payments
- Top 5 Worst Car Buying Mistakes