Are consumers trying to bite off more than they can chew? Swapalease.com approved fewer than half of its lease applicants in May because consumers applied for leases on out-of-budget, high-end vehicles.
Swapalease.com, which connects consumers who want to get out of their leases with consumers seeking short-term leases, approved 48.1 percent of applicants last month, a record low and significant dip from the first-quarter average approval rate of 62.1 percent.
More consumers than usual applied to take over leases on vehicles with monthly payments in the $600s and $700s, Swapalease said in a statement. But the consumer confidence behind those applications often didn't match the applicants' eligibility. Applications for such expensive monthly payments typically have a higher rejection rate because applicants often fail to meet the credit standards of the leasing company, the statement said.
"With a healthy economy and moderate fuel prices, we believe people are feeling confident in obtaining a higher monthly vehicle payment each month," said Scot Hall, executive vice president of Swapalease.com. "Unfortunately, their attempts aren't always successful, especially if their credit just doesn't match the appetite for their desired vehicle."
A confident consumer base is positive for the industry, but it can turn negative if consumers make mistakes. F&I managers and lenders may have to coach customers even more as they eye more expensive vehicles and advise them against buying a car they can't afford.