A recent industry report shows that auto loans remain the most popular choice when it comes to car financing, but that leasing is slowly gaining ground.
According to a recent report by Experian Automotive, while auto loans are still the main choice for most people who are looking into auto financing, leasing is becoming more popular every year. The amount of vehicles being leased is now at its highest since 2006, rising from a total of 25% to around 28% of all newly-financed vehicles in the past year.
But, why is this the case? Why are people now beginning to choose leasing over loans? Well, the current economic climate will certainly have something to do with it. People are following a strict monthly budget, therefore cannot afford to pay quite as much as it would cost to take out a car loan. The report also shows that the average monthly payment for a lease is around $50 lower than that paid for a loan, which will obviously be a huge selling point for those on a budget.
Though, despite the rise in consumers seeking leasing over loans, it can also be seen that car financing in general has been on the rise in recent years. Auto loan amounts are higher than ever before, both for new and used vehicles. The primary reason for this upsurge in auto loans is that financing is now much easier to attain than it has been in the past. Looking into the application process shows as much, but the average credit score of those taking out new auto loans holds the most compelling evidence. This figure has dropped around 15 points in the past year, meaning that those with lower credit scores are now being considered when they perhaps weren’t before.