Leasing Nets More Car for Monthly Dollar

Should I lease or buy isn’t as age-old a question as which came first, the chicken or the egg, but it undoubtedly has more application to your everyday life.  As vehicles get more sophisticated, complicated and expensive, leasing is increasingly seen as the right solution by those acquiring a new car.  These days one of every three vehicles is leased, and the key reason is very simple – leasing a vehicle enables you “to drive more car” for your monthly expenditure. 

The divide between the monthly payment on a vehicle lease compared to the monthly payment when financing a vehicle continues to widen, particularly as manufacturer’s suggested retail prices (MSRPs) and transaction prices continue to grow.  The contrast is most stark in case where the carmaker puts the vehicle on sale by offering a promotional lease that it subsidizes.  These “subvented” leases are the offers you usually see advertised on TV and online.  Choosing a vehicle with a low-cost lease is the best way to reap the advantages of today’s heavily competitive marketplace.

Swapalease.com, the nation’s largest online lease marketplace, analyzed monthly payment terms on some of today’s most popular leased vehicles and compared them to the monthly payments in a 60- and 72-month finance programs.  The 60-month loans carried a 3.50% interest rate and the 72-month loans were at 3.75%. The payment analysis reflects average down payment terms already baked into the deals for both the lease and finance offers.

The results are pretty stark and offer compelling evidence as to why so many consumers are opting to lease rather than buy.  For example, if you leased a Volkswagen Passat 1.8TS you'd pay $149 per month for 36 months. However, if you bought that same car and financed it for 60 months, your cost would be $360.94 each month.  If you financed it over a longer period of 72 months you'd still pay $308.16 each month.

The Volkswagen Passat is just one of more than a dozen vehicles Swapalease.com analyzed to point out the current monthly cost advantages of leasing instead of buying.  Among luxury cars, the monthly price differential is equally telling.  A Mercedes-Benz E300 4MATIC, a truly amazing luxury sedan, will cost $902.40/month over the course of a five-year (60-month) loan or $770.44/month over 72-months, but in a special 27-month, low-mileage (10,000 mile/year) lease, the monthly payment is just (?) $589.00.

The reliable Toyota Corolla is now being offered at $199/month on a 36-month, 12,000 mile-per-year lease. That same car is financed over 60 months would cost 301.36/month and over 72 months would cost $257.30. 

Looking for a luxury SUV?  The Acura MDX is currently being promoted with a 36-month, 10,000-mile-per-year lease with a monthly payment of $409.  Should you buy that same front-drive vehicle it would cost you $741.60 over 60 months or $633.16 over 72 months.

While the monthly payments are startlingly lower in the lease scenarios, it should be noted that leases bring with them no equity for the payer.  At the conclusion of the finance process (e.g. 60-months) the driver owns the vehicle.  That is why obtaining a vehicle with a promotional lease deal is especially valuable to people who like to drive a new car every three years or less.

Blue on Rise as Car Color

Fans of car color, you can rejoice. Into the sea of white, silver and black, an actual color is rising to the top of the car color popularity charts. According to international auto paint leader PPG, blue is the fastest-growing color for automobiles around the world.

Last year blue increased by three percent as a preference for luxury, midsize and compact cars, showing it was a color on the move. This upward trend continued across a number of regions worldwide this year, with blue increasing as a color preference for luxury cars by five percent.

Another piece of evidence that points to blue’s ascendancy is its recent use on auto how concept vehicles.  For example, blue was a dominant hue at the North American International Auto Show over the past four years, with featured applications on the Buick Avista concept car, Audi Sport, Volvo S90 and S60, as well as on various Mercedes, Porsche and Lexus models.

In North America, blue is a popular choice for luxury cars while it is a top choice among mini cars in China. In Europe, consumers prefer blue on sports cars more frequently than any other car type. Though blue is predicted to become more noticeable in the automotive marketplace, the applications of the color on vehicle types around the world remain unique.

“PPG’s leading position in paint and color forecasting allows us to analyze cross-cultural and cross-industry trends with our 20 global color stylists from seven countries,” said Jane Harrington, PPG manager, automotive color styling. “While white, black, gray and silver continue to be popular color choices, we’re seeing a steady increase in the desire for cars in varying blue and brown shades.”

While blue is definitely on the rise, in North America white is still the reigning champ with 25 of vehicles sporting that (non) color.  Black (21 percent) and gray (17 percent) rose 2 percent and 5 percent respectively for 2017, while silver (13 percent) dropped six percent.  Despite the fact that its star is on the assent blue tied with red at 10 percent in the latest analysis. 

PPG color expert Harrington said the same “comforting neutrals” that consumers favor in fashion, technology and their homes cause silver and gray to continue to be popular in automotive colors across all types of vehicles due to slight nuances in color and classic roots. “Chameleon-like hues” that have gray and blue undertones remain top choices among consumers, as they represent calm, comfort and a middle ground.

Who Cares About Luxury Cars?

An auto journalist was talking with an executive from a Korean-based carmaker when the subject of luxury cars came up. The Korean marque had just introduced a vehicle that was luxurious and pricey for the brand, and this prompted the journalist to ask if the executive really thought his brand could succeed in selling such a car.

“Yes, I think we can,” the executive said. “Our research told us that buyers of traditional luxury brands are more open to lower-priced alternatives than you might think. What they found once they owned a luxury car was it didn’t change their life.”

Now, new research reinforces that view. Almost 1 in 3 luxury-car owners has a more negative attitude toward purchasing another luxury vehicle in the future, according to a recent survey conducted by TNS, a global market research firm. Since the Korean automaker introduced its own lower-priced alternative to traditional luxury cars, the overall economic situation has turned even more in favor of a switch down. With the unknown future of the European debt crisis, continued economic concerns throughout the U.S. and the potential of slower growth in global auto markets, consumers’ fears are prompting concerns that the past sales growth the luxury-car segment has enjoyed could be over.

Why are well-heeled buyers cooling off on the idea of buying another luxury car? The most common reason cited focuses on their questions and fears regarding the current and future affordability of ownership (74 percent). Some 43 percent cited insurance and maintenance as a pivotal concern for future purchase. This is one big reason why most luxury-car manufacturers are offering “free maintenance” plans these days.

“Clearly the high visibility of the recent debt crisis and the ensuing mayhem in the financial markets is causing negative sentiment toward the luxury-vehicle segment,” says William Bruno, vice president of TNS. “What is most telling is the similar level of negative attitudes expressed by a large portion of existing luxury-vehicle owners, as well as non-owners who aspire to own luxury vehicles.”

The research also suggests that many current luxury-car owners and those who might aspire to luxury-car ownership aren’t as financially secure as one might perceive. According to the survey, 19 percent of luxury-vehicle owners who showed negative attitudes toward purchase cited the lack of fuel economy in most luxury brands as being the reason they were shifting away from the luxury segment.

“The high focus on fuel economy is surprising to us because, according to our research, many luxury brands offer competitive gas mileage when compared to similarly equipped, non-luxury midsized vehicles,” says Bruno. “The overall perceptions aren’t matching up with reality, and this is a great opportunity for marketers and manufacturers to continue demonstrating the real economics associated with luxury brands.”

Worrying about what the neighbors will think was also a reason that was given for avoiding or putting off a luxury-car purchase, the survey found. Some 13 percent of respondents cited an inappropriate or out-of-tune image as being the main reason for steering clear of buying a luxury-brand vehicle. When times are tough, many consumers don’t want to appear to be flaunting their relative wealth by buying an expensive luxury car.