if your car lease is up in 2019, you may want to reconsider whether to lease again.
“The car market in 2019 is unlike markets we've seen in the past because a lot of people leased in 2016,” says Jessica Caldwell, executive director of industry analysis at Edmunds. “So three years later, vehicles cost more money, and interest rates are the highest they’ve been in a decade.”
That means higher prices for car shoppers. For those in the market for a new vehicle, Edmunds data reports the average annual percentage rate (APR) on a new vehicle in 2019 was 6.28%. In April 2016, the average APR on a new car was 4.7%. If you’re planning to lease, monthly payments will be higher: Caldwell says people can expect to pay $60-$190 more per month for the same vehicle they leased in 2016.
While leasing has its benefits, Caldwell says it’s important to be more flexible as you’re looking for a new car. One option is to extend your lease temporarily. This will buy you more time to find a better deal, and lock in a lower rate.
Leasing is good for people who don't necessarily want to commit to a vehicle for the long term, but you may want to extend your lease—sometimes the offer will be for a few months,” she says. “Generally, the deal you had three years ago is probably a better one that you're going to get today.”
Caldwell also recommends buying a certified pre-owned car instead of signing a new lease contract.
“Certified pre-owned [cars] are generally low mileage, good condition vehicles, and because there were so many vehicles that were leased three years ago, there's a lot of them,” she says. This means prices can be flexible. Additionally, these vehicles come with a warranty from the dealer, so you’re not driving a lemon off the lot.
Caldwell says automakers are always interested in “conquesting” potential buyers: “If you have a vehicle that is competitive with another vehicle, that automaker might offer you a better deal,” she says.
Search the dealer online, and look for incentive deals. Caldwell says it’s an opportunity to save without having to put in much work as the buyer.
If you think you can do better by buying your leased car and then reselling it yourself, Caldwell says that’s a potential way to make some money.
“When people are ending their lease, they can get the vehicle appraised in terms of how much it would sell on the used market, and sometimes that price is actually more than the residual [loan amount],” she says.
Caldwell says you could pay off the remainder of your loan and then turn around and sell it on the used car market.
Your best option comes down to the research you do, Caldwell says.
“If you are in the car market that there's a lot of different options, so I think more than ever you really have to research all the different ways to get the best deal for yourself,” she says.