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How the leasing market is changing Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial choices by providing you with interactive tools and financial calculators that provide quality and impartial content by enabling users to conduct research and compare information for free and help you make sound financial decisions. Bankrate has agreements with issuers, including but not restricted to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this website are provided by companies that pay us. This compensation could affect how and when products are featured on the site, such as such things as the order in which they may appear in the listing categories, except where prohibited by law. Our mortgage and home equity products, as well as other home loan products. But this compensation does have no impact on the information we publish, or the reviews appear on this website. We do not contain the entire universe of businesses or financial offerings that could be available to you.



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3 min read . Published December 08, 2022
Writen by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers with the ins and outs of securely borrowing money to purchase a car.







Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to control their finances by providing precise, well-studied information that breaks down complicated topics into bite-sized pieces.









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Many motorists opt to have the ability to switch out their car more frequently and also avoid a significant financial commitment. While leasing is a popular choice but there's been a decrease in its availability. In the peak, nearly 30 percent of retail sales were leased between 2015 and 2019. The lease share is now close to that 13%, according to Cox Automotive. This decline should give pause to those , as it could cost more. Why has vehicle leasing decreased? Leasing has seen a drop due to three main reasons, all of which were triggered partly by the supply chain and pandemic issues that followed. 1. The cost of leasing has risen to a point that it is prohibitive. The most attractive benefits of leasing is benefits it gives as compared to purchasing the same car. In general, leasing is cheaper because you pay for the vehicle depreciation incurred during the duration of the lease, plus the rent and taxesas well as possibly some . Additionally it is an upfront cost that is lower compared to buying. The second quarter in 2022 it was the case that the lease of a Honda CR-V cost to lease rather than purchase according to Experian. However, as the cost of vehicles has gone up so has leasing no longer a less expensive monthly expense. Last year, consumers have paid the same amount for leasing the car they would have on a new vehicle loan in 2020, according to Cox Automotive. For many, this high cost negates the primary benefit of leasing, and makes it out of the equation. 2. A rise in lease buyouts Despite fewer cars on the market and more expensive , many are holding onto their lease cars instead of signing up for the purchase of a new car. This is known as a . As long as they owned the vehicle, consumers were able to avoid the lease market as well as the higher costs to purchase. However, as more and more drivers agree to lease buyouts, it is a threat to the leasing ecosystem. This disruption to the leasing process increases the dearth of vehicles. 3. Less leasing incentives, which means lower numbers of vehicles available on the market, dealerships have to make up for any money that is lost through other methods. One method is to eliminate any incentives that would have previously been present. This is especially applicable to leasing vehicles. So with higher costs and fewer incentives to help sweeten the deal leasing is losing a lot of its luster. It is possible that buying used cars will be more expensive . The change in the leasing market will have ripple effects on cars and vehicles. If more people hold on to their cars that they lease and sell them off, it restricts the market for used cars to a certain extent. Cars that are leased that aren't returned to lease again often end being sold on the used car market. Since there are less of them coming back into the round, there will likely be fewer used cars to buy. If you are like most drivers -- don't have the luxury of waiting for a car to be purchased, consider . Taking the extra step to get preapproved or could help you save money in the longer term. Do you want to lease or purchase in 2023? The choice to buy or lease is based on your personal preference and needs. You should consider the pros and cons of leasing or purchasing your next vehicle. Leasing
Buy
Cost
Leasing tends to carry lower monthly installments and less money put down initially.
It's possible to have to make a bigger deposit in the beginning and then spend more every month.
Ownership
You won't fully own the vehicle until you complete an agreement to buy out the lease.
After the loan is paid back, you have full ownership of the car.
Restrictions
You will have restrictions regarding the amount of miles you travel in the ownership period, typically ranging from 10,000 to 15,000 miles.
There are no limitations on the vehicle's mileage or other limitations on driving.
Additional costs
Depending on the lease the lease will likely require "wear and tear" fees based on general maintenance of your vehicle.
You will be accountable for all long-term maintenance costs that come up in the course of ownership.
While either option comes with advantages and negatives. Regardless of which you choose, prepare to spend more in the coming year. This is especially true when leasing, since it, unlike the past, could cost as much as the monthly cost of purchasing the vehicle.


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Writen by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers to navigate the details of taking out loans to purchase the car they want.



Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers feel confident to manage their finances through providing concise, well-studied and well-researched content that break down complex topics into digestible chunks.






Auto loans editor




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