The popularity of car leasing has risen sharply in the last few years, reflecting a type of consumer who wants less commitment and less in the way of monthly payments. The old notion of ownership, which was once enough to make traditional vehicle financing by far the most dominant retail option, appears to be less important to the modern consumer.
This is, of course, a broad generalization. There are specific reasons cited time and again by consumers for choosing leasing over buying, three of which are listed here. If you want to understand why leasing has become so popular lately, it has a lot to do with the three following benefits.
Less Commitment = More Flexibility
It’s not a stretch to say that consumers these days are more “commitment averse” than their predecessors. It makes total sense. In an age of endless options and constant, speedy product improvement, why would someone want to commit to a car for 7-10 years? Leases, on the other hand, offer a much smaller window of commitment (two to four years, usually) meaning that consumers enjoy greater flexibility.
Modern life is also fraught with unpredictability – relationship changes, job changes, financial changes, etc. – and that precariousness makes flexible vehicle leasing made easy preferable to ownership for many modern consumers.
Leasing Allows You to Drive More (and Better) Cars
There are a lot of cars out there, far more than any time in the past. Driving a new car every eight years may allow you to drive a few cars in your lifetime, but driving a new car every two years allows you to drive a lot more. Four times as many, to be precise. Consumers crave variety, and leasing allows them to partake in the wide variety of automobiles available on the market.
Not only that, but with leasing, consumers can enjoy a better car than if they were to purchase. Because you only pay for the cost of depreciation over the lease term, your dollar gets you more when you lease. You might not be able to buy a luxury sports car, but leasing it can be feasible. For many consumers, owning an average car vs. driving a nice car is no-brainer.
No Ownership? No Problem, if There Are Lower Monthly Payments
As mentioned, leasing comes with lower monthly payments as opposed to buying. This is because, rather than paying a portion of the total value of the car, you’re paying a portion of the cost of depreciation (the selling price minus the residual value after the lease term). You might not technically own the car, but you enjoy it exactly the same way, only for a lower monthly cost. As long as you don’t get hung up on the concept of ownership (which fewer modern consumers appear to be) then leasing can help you save money. And with the economy as it is, saving money is a key priority for many people.
If you’ve ever scratched your head wondering why leasing is so popular nowadays, you have your reason: flexibility, value and a lower monthly cost.