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Posts Tagged ‘auto leasing’

Auto Loans Top $1 Trillion, But Delinquencies on the Rise

Rising lease rates pose another potential problem.

by on Sep.07, 2016

August marked the second consecutive quarter where auto loans topped the $1 trillion mark.

If you’re making monthly payments on a new car, truck or crossover, you’re not alone. The long, record recovery of the U.S. automotive market has resulted in an all-time high in automotive debt – and is also leading to a rise in delinquency rates.

Between April 1 and June 30, Americans were paying off $1.027 trillion in auto loans, according to Experian Automotive, with a growing share of that due on new vehicle leases. At the same time, the number of buyers who have fallen 30 to 60 days behind on payments rose during the second quarter, Experian reported.

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The rise in delinquencies, the increasing dependence upon leasing and the fact that subprime and deep-subprime loans are rising has begun to worry many observers. Nonetheless, “The sky is not falling,” said Melinda Zabritski, the financial service firm’s senior director of automotive finance.

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American Car Buyers Paying Record Prices, Going Deeper Into Debt

Leasing soars as motorists look to hold costs down, says new study.

by on Mar.03, 2016

American motorists are paying more for their vehicles and borrowing more.

Even as U.S. car sales surge to record levels, a new study shows that American motorists are spending more than ever for their vehicles – with loan levels also reaching new records.

Searching for a way to offset rising prices, a growing number of buyers are turning to leasing, according to Experian Automotive which issued its quarterly “State of Automotive Financing” report on Thursday.

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“People shop for vehicles largely based on monthly price, and right now, average dollar amounts for new vehicle loans are soaring,” said Experian’s auto credit director Melinda Zabritski.

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Auto Buyers Loading Up on Loans as Monthly Payments Hit Record

Buyers also extending loans to record levels.

by on Jun.02, 2014

While sales continue to rebound, consumers are borrowing more to get into a new vehicle.

U.S. auto buyers are paying more than ever and stretching out their loans to record lengths in order to make their monthly payments, according to a new study.

Consumers are also turning to leases in record levels to help cut their costs, reveals the latest State of the Automotive Finance Market, from the data tracking firm Experian Automotive.

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“Consumers are really relying on financing as the price of new vehicles continues to move higher,” said Melinda Zabritski, Experian’s senior director of automotive credit. “As the cost of purchasing a new vehicle continues to rise, consumers clearly are stretching the loan term to help lower monthly payments, keeping them at a manageable level.”

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Leasing Regains its Appeal

With increased availability, over one in four American car buyers opt to lease.

by on Jun.28, 2013

Chevy has turned to super-low lease rates to help spur lagging Volt sales.

Looking for a quick way to cut the cost of buying a new car? You’re not alone, and that’s why a growing number of American motorists are opting to lease, rather than buy.

If that sounds a note of déjà vu, no surprise.  Leasing was big news for U.S. auto buyers in the years leading up to the economic crash.  For luxury brands, in particular, leasing accounted for as much as 80% of their sales. Then the bottom fell out and some makers, notably General Motors, pulled out of leasing entirely.

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As credit has loosened, auto buyers and automakers alike have rediscovered leasing’s advantages and the numbers are once again climbing – but so is the number of lease customers who find themselves wanting to get out of their vehicles sooner than expected, industry observers note.

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McBlog: Fiat Delivers a slap in the face.

Where’s the lease?

by on May.29, 2012

Supermodel Catinel Menghia poses with a Fiat 500 Abarth. She can slap us any day, but why is Fiat punching out its customers? asks McBlog author Denise McCluggage.

Doug, a friend and regular at Santa Fe’s Tuesday Car Table, test drove a Fiat 500 Cabriolet that I had for a week and loved it. But considering our city’s 7000-feet altitude decided a turbo was indicated. He’d wait for the Abarth. He told Fred Vang, another Car Table regular, to order one for him. That’s what Fred does, connects people and cars.

As a Personal Car Consultant he helps clients decide what new car best suits their needs and does all the wheeling-dealing and sees that they get the best deal delivered ding-free and clean to their door.

Fred is fond of telling clients: “You seem to know what you want but do me a favor: dance with a couple more before you get married.”

In this case since Doug had driven a number of alternatives, the dancing was Fred running numbers, checking with many sources for prices on three cars, all with Doug’s options. The three: Mini Cooper S, VW Golf GTI and the Fiat Abarth.

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Fred compiled the numbers on a grid and presented them to Doug with a detailed explanation. Doug said it was like “a slap in the face” like in the Fiat Abarth ad featuring the leggy model Catrinel Menghia, dressed in red and black. And that’s why Doug arrived at our monthly Car Table driving a new VW Golf GTI.

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TrueCar Acquiring Industry Bible ALG

Deal another move to make new web service an industry powerhouse.

by on Aug.22, 2011

TrueCar is acquiring ALG for $83 million.

Internet start-up TrueCar.com will invest $83 million to acquire ALG, a data service that is the gold standard for the automotive industry when it comes to establishing such things as what a car is expected to be worth at trade-in or when its lease expires.

The acquisition of what was originally known as the Automotive Lease Guide is expected to significantly enhance the capabilities and credibility of TrueCar, an upstart website and service that has challenged the traditional online method of both providing consumers with automotive pricing and helping dealers and manufacturers connect with buyers in the final stage of picking a new vehicle.

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“We’re committed, first and foremost, to transparency when it comes to accurate market data,” said TrueCar CEO and founder Scott Painter, and he expects that the extensive research capabilities of ALG will continue to improve TrueCar’s own services.

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Leasing Making a Big Comeback

May soon account for 43% of luxury market again.

by on Mar.04, 2011

Good news for Land Rover as it launches - and leases - the new Range Rover Evoque.

In the “bubble years,” prior to the economic meltdown, leasing had become the option of choice for millions of American motorists, accounting for a majority of the business for some luxury brands.  After all but vanishing during the downturn, leasing is now poised to make a major comeback, suggests the Automotive Leasing Guide.

Also known as ALG, and a principle benchmark for residual values and depreciation data, the publication predicts a significant resurgence in the automobile leasing market that will continue right on through 2015.

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The luxury segment will lead the way with lease penetration rates rising to nearly 43% by 2012, while lease penetration in the mainstream market will increase to 17.5% over the next two years, according to the new estimates prepared by ALG.

Numerous brands are expected to capitalize on this leasing resurgence, based on the ALG 2011 March/April edition and current high residual values forecasts, which allows them to offer highly competitive monthly lease payments.

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Leasing Now Available at Chrysler, Jeep and Dodge

An important sales tool reappears on all models after a long absence at the sales challenged maker.

by on Sep.16, 2009

Fong needs to move some metal at the Italian-controlled automaker.

Fong must "move metal" at the Italian-controlled automaker.

Chrysler Group LLC today announced it would offer a leasing option starting tomorrow for U.S. customers on all 2010 model year Chrysler, Jeep and Dodge vehicles through Chrysler’s preferred lender, GMAC Financial Services.

Year-to-date, Group sales are of -40% as the one-two punch of impending bankruptcy and a gas guzzling product line combined to knock the company’s vehicles off the consideration list of the few shoppers that were in  the marketplace.

Like other automakers, Chrysler, it appears, was caught short with an inadequate supply of small cars — or more troubling for its new taxpayer owners, lack of consumer demand for the cars  it has and will have for the next year or two —  just as demand for fuel efficient cars surged due to federal government financed incentives under the CARS program, aka Clunkers.

GMAC re-initiated leasing as a financing option at General Motors in early August in support of a lease promotion on select GM models, along with competitive standard rates on all new GM vehicles.

“ We are pleased to re-enter the leasing market so we can offer customers the opportunity to lease vehicles at rates competitive with the marketplace,” said Peter Fong, President and Chief Executive Officer–Chrysler Brand and Lead Executive for the Sales Organization, Chrysler Group LLC. “Our ability to offer additional financing options will benefit consumers who have long been fans of leasing and appreciate the flexibility this financing option gives them.”

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Easy Terms!

For car shoppers looking for lower payments – long the allure of leasing – the new financing programs at both Chrysler and GM may not be of help.

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GMAC Restarts Some Leasing after One Year Layoff

GM yes, Chrysler no, on limited offers.

by on Aug.10, 2009

It's a very limited program though.

It's a limited program though.

GMAC Financial Services Incorporated is prepared to underwrite leases on new General Motors vehicles for the first time in more than a year. However, it’s not yet prepared to underwrite leases on vehicles sold by Chrysler dealers, GMAC officials confirmed.

“GMAC’s increased funding flexibility, the completion of key manufacturer restructuring and rising used car values have made leasing a viable financing option,” said Bill Muir, GMAC president.

“We will support a lease promotion by General Motors in 45 states, and may add a leasing option for other makes or models in the future. While we do not expect leasing to return to its hey-day levels across all models, it remains an attractive financing tool for certain segments, particularly new launch vehicles and select models in the luxury market,” he said.

Covered are –

  • 2009 models: Cadillac CTS, Chevrolet Malibu, Chevrolet Traverse
  • 2010 models: Buick Enclave, Buick LaCrosse, Chevrolet Equinox, GMC Acadia

“For the true lease intender, someone who wants to rotate vehicles more frequently without the need for trade-in or resale, GMAC’s new lease program is a great financing alternative,” Muir said.

GMAC also has separate lease program underway in Ohio, Michigan, New York, Connecticut and New Jersey, Muir said.

Mark LaNeve, GM vice president of sales, has said that the lack financing for leases has undercut GM’s sales in recent months.

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New Lease Program at GM Shuns Loss-Making GMAC

In a pilot program U.S. Bank offers leases on select Cadillac, Buick, GMC and Chevrolet models.

by on Aug.05, 2009

2010 Cadillac CTS Sport Wagon

Leasing is particularly critical in the luxury segment where Cadillac is just introducing two new models.

General Motors Company has turned away from its preferred lender, GMAC Incorporated, and expanded its financing options for prospective buyers by turning to leases written by U.S. Bank. The leases are part of a pilot program that includes select GM vehicles sold in New York, New Jersey, Connecticut, Michigan and Ohio.

In addition, a lease on the all-new Cadillac SRX will be offered by U.S. Bank nationally. The pilot is currently planned to run through August 31, 2009, but will likely be extended if it works.

“GM and our dealers have done an incredible job without a leasing program throughout this difficult economic period, but we always knew that we would get back into leasing as it is important to a certain group of our customers,” said Mark LaNeve, GM vice president of U.S. sales.

GM dropped leasing one year ago when resale values plummeted, forcing a write-down by the finance company GMAC of the value of the vehicles coming off lease. Before dropping leasing, an estimated 25% of the sales of GM vehicles were accomplished by the financial device that allows lower monthly payments and use of a vehicle for a limited time compared to an outright purchase.

LaNeve estimated that the lack of leasing has cost GM one to two percentage points of market share, at a time when the company must prove it can halt its decades’ long decline in share, which is currently running at about 18%. Leasing is particularly critical in the luxury segment where Cadillac is just introducing two new models, SRX and CTS Sport Wagon.

Lease offers will be available on the 2009 Cadillac CTS, Chevrolet Malibu and Traverse. For 2010 models, leases will also be available on the Cadillac SRX, Buick LaCrosse and Enclave, the GMC Acadia and the Chevrolet Equinox. Monthly payments will vary, according to the customer’s down payment and the first month’s payment due at signing, but are expected to be “very competitive.” No security deposit will be required.

U.S. Bancorp (NYSE: USB), with $266 billion in assets, is the parent company of U.S. Bank, the 6th largest commercial bank in the United States.

GMAC itself remains severely challenged, as it continues to report huge losses because of loan defaults and the depressed housing and auto markets. In the second quarter of 2009 GMAC posted $3.9 billion loss compared to a net loss of $2.5 billion in the second quarter of 2008. Results included a $1.2 billion tax charge caused by converting to the financial holding company to a corporation. To date, GMAC Incorporated has accepted $13.5 billion in U.S. taxpayer funding. The government has a 35% stake.

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