Americans eager to drive a new car or truck have rediscovered leasing deals. In fact, leasing hit a new high in the first quarter according to Experian Automotive which tracks the auto finance market.
"Leasing is definitely back," said Melinda Zabritski senior director of Automotive Credit with Experian. "People want the lowest monthly payment possible for a new car or truck and many times they can get that with a lease."
Experian says leases account for 27.5% of all new vehicles financed in the first quarter. That was a 3.1% jump from the first quarter of last year and is the highest level of leasing Experian has recorded since it started tracking the auto finance market in 2006.
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Lower Monthly Payments For a Longer Period
Despite the amount financed by auto loans increasing $620 to $26,648 in the first quarter, consumers have managed to keep their monthly payments in check. During the first quarter Experian says the average monthly payment for new vehicle loans was $459, a drop of $3 compared to the same time last year?
How have car buyers kept monthly payments from edging higher? In part they've done it by spreading out the length of their auto loans over a longer period of time.
In the first quarter the percentage of auto loans stretching out 73-84 months jumped 27.4% and now makes up 19.5% of all new vehicles financed.
"Loans of six plus years have become extremely popular, especially those that are 75 months," said Zabritski.
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For the second straight quarter the average length of new vehicle auto loans was 65 months.
Leasing Growing With Luxury Auto Popularity
The increase in auto leasing has corresponded with rising sales of luxury cars and SUVs.
"Leasing has long been the primary way many people finance a new luxury automobile," said Zabritski. "A monthly lease payment for a new luxury car is much more affordable way to go for most people."
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Experian's data shows Mercedes and BMW generated among the most leases in the first quarter.
This year Mercedes, BMW, Lexus, Cadillac, Audi, and Porsche have all grown sales faster than the entire U.S. market.