Looking to tempt owners of Asian makes with leases about to end, Chevrolet has embarked on an aggressive leasing program designed to woo those prospects with low rates on relatively short terms. Available to lessees of Toyota, Honda, Hyundai, Mitsubishi, Mazda, Nissan, Subaru and Kia vehicles, the incentive offers up to $3,000 in savings.
The catch is that those looking to switch to Chevrolet are responsible for the balance of their contracts with the other automakers. Still, some of the deals are pretty eye-popping. Leading the charge is the deal on 2017 Cruze models, which can be leased for two years at $99 per month with just $969 up front. The subcompact Trax crossover is also on the same term for just $119 per month and $1,669 due at signing. Chevy’s midsize Malibu has a $149 per month rate for three years with $1,659 down.
Two larger 2017 crossover SUVs that will be supplanted by all-new 2018 models are the Equinox and Traverse. These previous-generation models can be leased for two years, with the Equinox payment fixed at $139 per month with $1,379 down, while the Traverse payment is $229 per month with $2,589 upfront cash. The hot-selling Chevy Colorado midsize pickup is also eligible for a two-year lease, also at $229 per month with $1,449 cash due at signing. Finally, the plug-in hybrid Chevy Volt is available for $229 per month over 3 years with $1,469.
Of course, you should look closely at the fine print. Again, you have to have proof of a lease on the competing make, which you are still responsible for, and there are mileage restrictions of 10,000 miles per year or 20,000 to 30,000 over the life of the respective two- or three-year contracts, except for the Volt, which may turn out to be the best deal of the three. On that model you’re allowed 15,000 miles per year for a total of 45,000 miles. What if you go over the limit? The charge is 25 cents per mile, not an insubstantial sum which translates to $250 for every 1,000 miles over the cap.
Loan amounts, leasing popularity increase
Reflecting higher transaction prices, outstanding loan balances as well as the popularity of leases continue to grow as consumers try to keep monthly payments on new vehicles in check. According to Experian, the average outstanding loan amount reached a record $30,621 in the fourth quarter of last year, a 3.6 percent over year-earlier levels. The loan amount on used vehicles didn’t rise quite as much, but it still grew 2.5 percent to $19,329.
Melinda Zabritski, Experian’s senior director of automotive finance, observed that the $11,292 gap between new and used vehicle loan balances is the largest recorded by the company. The higher balances reflect longer loan terms of 73 to 84 months, which now comprise nearly a third of the outstanding loans, up from 29 percent a year earlier. Used-car loans with longer terms typically are a smaller share, but still 73 to 84 month contracts account for 18 percent, up from a 16 percent share.
“This upward trend is causing many consumers to find alternative methods like extending loan terms, getting a short-term lease or opting for a used vehicle to get what they want while staying within their monthly budget,” Zabritski said. “With the average loan amount for new and used vehicles hitting all-time highs, we are seeing the need for affordability drive consumer purchasing behavior.”
One of those alternatives is leasing, which continues to see its popularity rise, accounting for nearly a third of all new vehicle acquisitions. Lower monthly payments are the chief draw since the average lease payment is currently $414, or $92 less than the average auto loan.
Mercedes eyes midsize pickup
When Mercedes-Benz unveiled its new midsize X Class pickup truck last year, it more or less said that it wouldn’t be bringing this truck to compete in the hotly contested U.S. pickup market. Now that the production version has bowed at the Geneva Motor Show, there are hints that the make may be changing its mind, especially in light of the strong showing of that category in the annual sales race.
In February, midsize pickup sales increased by 6.2 percent over a year earlier and 4.5 percent year-to-date over 2016. Even more important, sales grew by 19 percent from January to February as the market in general was cooling off. Much of that growth has come from the all-new 2017 Honda Ridgeline, hardly a traditional pickup. And while manufacturers are pushing up some incentives on full-size trucks, the popularly of their smaller siblings has not put an appreciable dent in the standard pickup market.
News reports indicate this change of heart when the head of Mercedes-Benz Vans, Volker Mornhinweg, told reporters that it is, in fact, considering U.S. sales of the X Class, which will be built in Spain in a joint venture with Nissan. The Japanese make already builds a version of the truck there called the NP300 Navara, which will also be sold as the Renault Alaskan.
“In the past year, the midsized truck market has come back a bit,” Mornhinweg said. “General Motors is launching a midsized truck. We are watching developments very closely, and we will take a decision at the appropriate time.”
Also: Kelley Blue Book Best Buy Awards of 2017
Interest rate hike hits auto loans
The Federal Reserve’s recent increase in lending rates by a quarter percent is being felt in the auto sector. According to Bankrate.com, auto loan interest rates are up nearly a half-percent across a wide range of loan terms. Data shows that the longer the term, the bigger the increase in rates.
The national average for a 36-month new-car loan that stood at 2.82 percent on Jan. 1. It is now 3.14 percent. For a 48-month loan, the rate moved from 2.98 to 3.3 percent. A 60-month loan now stands at 3.41 percent, up from 3.03 percent at the beginning of the year.
The rundown
Check out the This Week in Car Buying Podcast here.
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In the market for a new car? Explore these useful tips on how to get the best deal:
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