Borrowers with good credit scores choose to lease more often than those with poor credit scores. (iStock)
With car prices rising since the peak of the pandemic, many drivers are likely buying cars on leases rather than loans. Experian’s State of the Auto Finance Market Q1 Report.
Borrowers with higher credit scores are more likely to lease. Super prime and prime+ consumers choose to lease more than 30% of the time. For subprime consumers, that percentage drops to just over 23%.
Some states saw more vehicle leasing than others in the first quarter. New York and New Jersey had a higher percentage of leasing than financing. States with the fewest leasing were Arkansas, Oklahoma and Wyoming.
Among the many car brands, Honda leads the pack in car leasing, with 11.75% of leased cars being Honda models. After Honda, various Toyota models are leased the most. The top five brands leased are Chevrolet, Nissan, and BMW. Depending on the make and model, leasing can be more affordable, especially compared to buying outright. For example, a Honda CR-V costs an average of $480 to lease, but $639 if financed.
A Tesla Model Y is cheaper to lease than to buy, costing $528 to lease but $681 if you finance it, and a Nissan Rogue, which typically has a purchase price of $588, can be leased for just $445, according to a report from Experian.
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Used car loans are declining, but rising interest rates are pushing up monthly payments
Motorists who choose to buy a car are seeing prices drop, at least when it comes to used vehicles: Total used-car loan amounts fell in the first quarter, according to Experian research. But that’s the only good news, as interest rates continue to push up monthly payments.
Back in 2021, the average amount drivers spent to finance a used car purchase was $22,355. In 2023, that jumped to $26,571. At the start of the year, that average dropped slightly to $26,073.
But interest rates are offsetting the price decline: Car loan interest rates currently average 11.91%, compared to 11.40% in 2023 and just 8.87% in 2021. Despite rising interest rates, monthly payments on used cars have yet to go down: The average payment in 2021 was just over $400. Currently, most drivers are paying an average of $523 per month.
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Biden’s new fuel economy rules aim to save Americans more than $23 billion on fuel bills.
President Biden recently Final decision on fuel economy regulations This could save Americans billions of dollars on gasoline. The rule will gradually increase fuel economy requirements for certain vehicle models.
Fuel economy for passenger cars will increase by 2% each year from the 2027 through 2031 model years. Fuel economy for light trucks will also increase by 2%, but only for the 2029 through 2031 model years. After 2031, fuel economy for light trucks and passenger cars will be approximately 50.4 miles per gallon. This could save vehicle owners more than $600 in fuel over the life of their vehicle.
Fuel economy for large trucks will also improve over a slightly longer period. Fuel economy for trucks and vans will improve 10% per year for model years 2030 through 2032, and 8% per year for model years 2033 through 2035. These improvements will result in an average fuel economy of 35 MPG for all large trucks and vans, saving drivers more than $700 in fuel over the life of their vehicle.
“This new standard will not only save Americans money every time they fill up their tanks, but it will also reduce harmful pollution and decrease America’s dependence on foreign oil,” said U.S. Secretary of Transportation Pete Buttigieg.
As a way of contributing to pollution prevention efforts, these new standards will prevent approximately 710 million tonnes of carbon dioxide emissions by 2050.
“President Biden’s economic and climate policies have spurred a boom in America’s clean energy and manufacturing industries,” said National Climate Advisor Ali Zaidi. “From day one in office, the President has centered this transformative agenda on American workers and the unions that built the middle class, and positioned the U.S. auto industry as a global leader. The President’s policies are working. On factory floors across the country, autoworkers are building cars and trucks that give American drivers more choices than ever before.”
“These fuel economy standards are closely aligned with investments and standards across the federal government, building on this momentum to continue to spur job creation and deliver on the Biden-Harris Administration’s promise to accelerate addressing the climate crisis,” Zaidi continued.
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