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Chicago—September 18, 2008—In recent months, many manufacturers have announced they are cutting back on the car-leasing business or getting out of it altogether. Instead of asking the question, "Should I lease my next car?" many consumers are asking, "Can I lease my next car?"
"Unfortunately, given the current risks associated with leasing and the overall automotive marketplace, leasing a car that has a low monthly payment is likely to disappear for the foreseeable future," said Patrick Olsen, editor-in-chief of Cars.com. "And while some foreign manufacturers are still in the business of leasing cars, they are likely to cut back like many of the domestic manufacturers, or follow Chrysler's lead and get out of the business."
Cars.com has compiled a list of questions and answers to help guide consumers through the recent changes in the car-leasing industry.
Which manufacturers are still offering lease programs? Almost all; Chrysler is the only manufacturer to date that has said it will no longer financially back leases. Other manufacturers, like Ford and GM, said they will significantly cut back on leasing deals. Foreign automakers are still offering leases, though they may soon follow the domestics. You can also lease through one of the roughly 4,500 independent leasing firms, or through any of the thousands of car dealers who have favorable arrangements with their banks, or through your own financial institution -- bank, credit union, or savings and loan.
Should I still consider leasing as an option? There are still reasons to lease a car. Maybe you are self-employed and can write off your car payment. Maybe you like driving a new car every two or three years. However, because leases typically offered a lower monthly payment than financing a new car, many consumers chose leasing as a way to get a luxury vehicle that they wouldn't otherwise be able to afford. That scenario is likely to change. In fact, leases are likely to get more expensive and harder to find -- thus reserved for the most credit-worthy buyers.
What caused manufacturers to change? Lease payments are based on a formula that includes a car's residual value at the end of the lease term. In other words, when you lease a vehicle, you're paying for the depreciation of the car. As gas prices began to skyrocket, the projected depreciation of popular gas-guzzling SUVs was much worse than manufacturers projected. The difference between predicted and actual SUV residual values this year alone led to a $4.8 billion loss for domestic automakers.
For more information on car leasing, visit www.cars.com.
Cars.com is the leading destination for online car shoppers, offering credible, easy-to-understand information from consumers and experts to help buyers formulate opinions on what to buy, where to buy and how much to pay for a car. With comprehensive pricing information, side-by-side comparison tools, photo galleries, videos, unbiased editorial content and a large selection of new- and used-car inventory, Cars.com puts millions of car buyers in control of their shopping process with the information they need to make confident buying decisions.
Launched in June 1998, Cars.com is a division of Classified Ventures, LLC, which is owned by leading media companies, including Belo (NYSE: BLC), Gannett Co., Inc. (NYSE: GCI), The McClatchy Company (NYSE: MNI), Tribune Company and The Washington Post Company (NYSE: WPO).