When millennials are itching to get into a brand new car, many look to leasing.
Leasing made up 28.9 percent of new vehicles purchased by millennials in July, compared with 26.7 percent for buyers industrywide, according to Edmunds.com.
Over the past five years, new-car leasing among millennials has surged 46 percent vs. 42 percent among all car buyers, Edmunds notes.
Leasing obviously appeals to millennials. From the mind of a millennial, here’s why.
Millennials are cost-conscious. They want to spend a small amount of money for high quality items. They’re savvy shoppers who look around before they buy to get the best products at the best rates. A June survey of millennials by Edmunds and Morpace found that more than half of millennials are willing to pay no more than $299 a month for a car.They’re also only willing to put down $2,999 or less.
Consumers who enter these budgets into Edmunds’ affordability calculator are generally limited to vehicles priced under $20,000, Edmunds says. Shoppers who are willing to lease, however, can use the same budget toward a vehicle priced as high as $35,000.
Many millennials also have student loans they’ll be paying off for years, plus mortgage or rent payments. Car ownership may take too much of a hit on their budgets.
Millennials expect immediate gratification. Instead of saving up to buy a new car, they’ll take the new one at a low monthly payment rate.
Millennials like change. Whether it’s with jobs or purchases, millennials like having the freedom to change their minds. So getting into a new car every three years is a tempting option.
Millennials expect to have access to the latest technology. With smartphone upgrades coming up every year or two and laptops phasing out after three or four years, millennials expect the same for their vehicles.
Millennials may not want to deal with the upkeep of a car. They’re always on the go, and some even spend a chunk of time ride-sharing. With leasing, they can return the car before it needs many repairs, and often without worrying about exceeding any mileage limits.
Leasing makes sense to millennials, now the second-largest group of car buyers. And that begs a question: As millennials infiltrate the market and older generations fade from it, will leasing come to dominate new-car retail? We’ll see.