New car leases are more expensive due to a significant change in market conditions. An inventory shortage is making it harder to find popular vehicles, and manufacturer incentives are down. In some cases, automakers aren't even bothering to advertise lease deals because cars are so hard to find at dealers.
For example, the Toyota Camry LE is currently advertised at $269 for 36 months with $2,999 due at signing here in Southern California. The deal has an effective cost of $346/month. Based on our records, the cheapest Camry lease deal a year ago was $229 with $1,999 at signing or $285/month before taxes & fees.
That's a difference of $61/month for what's essentially the same car. Here, our analysis of dealer incentive bulletins finds that the biggest difference is that Toyota had a $2,075 lease cash incentive available in January 2021. Now, there are no such discounts on the Camry. In VW's case, you'll find no manufacturer lease deals.
Even though there are cheap lease deals from companies like GM, a closer look finds some important catches. For example, the 2022 Buick Enclave is one of the best SUVs to lease when coming from another Buick or GMC lease. Without a $3,250 loyalty discount, the amount due at signing can rise as high as $5,619.
To get the best deal possible, consider cars with good lease incentives. For example, the 2022 Nissan Sentra offers a $1,175 lease cash incentive but no rebate when buying. Similarly, the 2022 Hyundai Sonata is among the cheapest cars to lease with up to a $2,250 discount for buying but just $500 for buying.
New car prices may not go down anytime soon. On the plus side, some manufacturers are offering ways to lock-in current lease rates while you wait for a car to become available in stock. For example, Honda is offering a form of price protection for up to 90 days on approved credit for qualified shoppers.
Top New Car Lease Deals
FAQs
Why are car leases so expensive now? The cost of cars has significantly increased, as has the cost of leases. Plus, many current lease contracts aren't as favorable toward drivers as they once were – a result of increased demand for new cars.
Why do people lease expensive cars? ›
One reason to lease a luxury car is there is less depreciation when you give the vehicle back. A lease agreement is determined by the number of years you keep the car, how many miles you put on it, and the shape it's in when returned. Luxury cars retain their residual value.
Why are lease money factors so high? ›
Two of the primary factors that affect the lease money factor are the lessee's credit score and the length of the lease. Generally, those with higher credit scores will be offered lower money factors, while those with lower credit scores will be offered higher money factors.
Why is it a waste of money to lease a car? ›
The obvious downside to leasing a car is that you don't own the car at the end of the lease. That means you don't have a trade-in if you decide to purchase a car. Consumers who routinely lease cars over many years may end up paying more than they would if they had initially bought the car.
Why are leases so bad right now? ›
However, monthly lease payments have not escaped the inflationary spiral in the retail car business. Lease payments today are as high as finance payments were just a few years ago. So instead of leasing, consumers are increasingly financing new vehicle purchases for longer terms.
Will car leases go down in 2024? ›
In 2024, lease returns are expected to rise then fall. Experian predicts, “retail leasing returns will rise to 1.1 million in the second quarter of 2024, but then fall to only 640,000 by the end of that year.” So, if you're hoping to buy a pre-owned car in 2024, look around April to early summer for the best selection.
Which car brands are leased the most? ›
Car brands leased the most in the U.S. 2021
As of the fourth quarter of 2021, Honda was the most leased car maker in the United States. 11.3 percent of new vehicle leases were Honda-branded vehicles, followed by Ford vehicles at 8.75 percent.
Does leasing a car ever make sense? ›
Deciding between leasing and buying a car will come down to your lifestyle, driving needs, and financial situation. Leasing can be attractive if you're looking for lower monthly costs, want a new car with new car technology every few years, and don't want to worry about certain tasks, such as selling your car.
What is the most expensive car to lease? ›
The $2.4 million (starting price) Pagani Huayra Roadster is now available through such a transaction — and it is the most expensive new car lease in history.
What is the 1 rule in car leasing? ›
It's a common rule of thumb to adhere to the 1% rule. This rule dictates finding a monthly lease payment equivalent to 1% of the car's purchase price. For example, a $60,000 car would be a steal if you leased it for $600 monthly. You cannot negotiate acquisition fees, residual value, registration costs, or sales tax.
Conventional wisdom suggests that putting money down on a car loan can help reduce the interest you pay over the life of the loan. However, you don't own anything at the end of a lease, so your down payment doesn't go toward building equity in the car.
What is a good interest rate on a lease? ›
The lower the money factor, the less interest you'll pay over your lease term. Generally, a money factor of 0.0025 and below (the equivalent of 6% APR) is considered a good rate.
Do rich people buy or lease cars? ›
Overall, only 8.5% of these high rollers paid cash. Around 31% leased and 60.4% took out a loan with an average payment of $2,201 and an average term of 56 months.
What are 5 disadvantages of leasing? ›
Disadvantages
- Lease increases. Many leases are set up to allow annual rent increases, while others often increase costs when your lease expires and needs to be renewed.
- Lease renewal ends – change of business location. ...
- No equity in building. ...
- Little control. ...
- Less space for growth.
Leasing a vehicle
Your monthly payments may be lower than buying, but the payments are going towards depreciation of the vehicle during the lease term plus rental charges. You may be responsible for early termination charges if you end the lease early. These fees can be very expensive.
Is leasing in 2024 a good idea? ›
Conclusion. In 2024, whether to buy or lease a car depends on your individual needs and lifestyle. With manufacturers pushing more attractive lease deals, leasing may become a more appealing option for many. Leasing is a great way to avoid the worst effects of today's high interest rates.
Are lease prices negotiable? ›
It's crucial to negotiate a lease deal as it can greatly impact the overall cost of the lease. You can secure a more advantageous deal by negotiating the lease terms, such as monthly payments, down payment, and mileage limits.
Does it ever make sense to lease a car? ›
Deciding between leasing and buying a car will come down to your lifestyle, driving needs, and financial situation. Leasing can be attractive if you're looking for lower monthly costs, want a new car with new car technology every few years, and don't want to worry about certain tasks, such as selling your car.
Is it better to lease when interest rates are high? ›
In terms of a loan, interest rates have a major effect on the cost of lease financing. Since the outstanding principal balance is paid after the interest is calculated, higher interest rates result in higher lease payments.
