SHOPSMART AUTOS – CUSTOMER REPORT – August 6, 2020
SHOPSMART AUTOS – CUSTOMER REPORT – August 6, 2020 Is Now a Good Time to Lease a Car? There’s no simple answer whether now is a good time to lease a car. Yes, there may be some great lease deals announced in the coming months, as automakers and their dealers do whatever they can to bolster sales and retain current lease customers. Some manufacturers, including Honda and Chevrolet, have rolled out zero-down lease deals on select models.A lease is a contract between you and the leasing company that is difficult to sever if you lose your job and can’t make your payments. Unless your job is on rock-solid footing, you should not lease a car until the economy is back on track. With a car purchase, you can sell the vehicle if you need to satisfy the loan. The same is not true of a car lease. Defaulting on a lease can destroy your credit for years, making it impossible to lease another car and more expensive to buy one.
Many automakers offered current lease extensions to many customers to get them through the worst of the pandemic. When those extensions end, automakers will likely roll out aggressive deals to retain their lease customers and attract those from other brands who have expiring leases. Those deals may be short-lived, however.
Is Now a Good Time to Buy a Used Car?
Now is an okay time to buy a used car, but not as good as it was early in the pandemic crisis. Used car prices rebounded strongly from their extreme lows and are now at or above pre-virus levels, according to J.D. Power. With many households bringing in less money than before, and consumers skipping mass transit for the virus-protected safety of private automobiles, the demand for used cars is going up. Fortunately, the flow of used cars into dealers has largely returned to normal and pent-up demand is slackening. If things continue on their current trends, prices should be near the same level as last year, according to J.D. Power’s market condition report. They do, however, expect continued volatility as outbreaks, federal stimulus payments, and other forces can quickly upend the market. Since many lessees could not return their cars in March and early April as planned, those cars are entering the used car market later than planned. That may put additional downward pressure on used car prices.
There are many good reasons to buy a used car rather than a new car right now. Topping the list is price. Used cars are much cheaper than new cars, and their lower prices lead to smaller, more affordable loans and less chance you’ll be underwater on your financing. Many automakers are offering attractive low-interest financing deals available on the purchase of certified pre-owned (CPO) cars. A certified used car is typically a gently used model that’s relatively young, with few miles on the odometer. There are even zero-percent financing deals available, which are very rare in the used car market.
Later in the summer, as the economy begins to pick up, greater-than-normal demand is expected for cheap used cars with prices under $10,000. Surveys are showing that many commuters will be skipping mass transit and will require cars for their daily commutes. Young consumers who may have relied on ride-hailing companies, such as Lyft and Uber, may be bypassing shared vehicles and looking for what they consider to be a safer transport option.
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