The volume of leases is expanding rapidly and expected to grow approximately 50% by the end of 2017 despite data proving that most consumers looking to buy new vehicles are still financing their purchases with loans, according to CreditForecast.com.
Total U.S. auto lease balances increased 9% in March compared with a year ago, more than twice the 4.2% increase of auto loan balances in March 2011. Lease balances originated by auto finance companies, in particular, rose 11% in March versus a year ago.
Equifax and Moody’s Analytics’ CreditForecast.com economic service forecasts auto lease balances to grow at an 8% average annual rate through the end of 2017, while auto loan balances are expected to grow between 2% and 3% annually over the same period.
Additionally, lease financing represents approximately 10% of U.S. auto lending provided by finance companies, which originate more than half of all U.S. auto credit. Financing from banks and credit unions comprises the remaining portion of U.S. auto lending.
Leases are growing in popularity in California, Florida, and the Northeastern U.S., said Amy Crews-Cutts, SVP and chief economist of Equifax. “Auto finance companies have ramped up the number of leases they are providing to well-qualified borrowers with higher credit scores.”
