Will leasing ever return to how it was pre-pandemic?
Discussion
Hi,
Very new to leasing as I've only just got into a position where I can easily afford a lease.
Spent some time looking through the old lease deals threads and was amazed by what you could get a few years back for your money.
Obviously things are a great deal different now but is leasing expected to return to anything like it was? I know the cost of living and everything else has created a perfect storm where these great deals are no longer available, but are things going in the right direction with leases?
I'm not in a rush to lease but I'm still torn between buying a used vehicle or having what I consider to be a hassle free 2/3 year lease and a nice new vehicle every so often.
Thanks
Very new to leasing as I've only just got into a position where I can easily afford a lease.
Spent some time looking through the old lease deals threads and was amazed by what you could get a few years back for your money.
Obviously things are a great deal different now but is leasing expected to return to anything like it was? I know the cost of living and everything else has created a perfect storm where these great deals are no longer available, but are things going in the right direction with leases?
I'm not in a rush to lease but I'm still torn between buying a used vehicle or having what I consider to be a hassle free 2/3 year lease and a nice new vehicle every so often.
Thanks
After the 2008 financial crisis, interest rates were at a low, and for a lot of people this is all they can remember. When money is cheap, borrowing and leasing is cheap. Then covid happened, and governments printed money, and then Russia invaded Ukraine.
Compare interest rates to pre-covid. When they return to those levels, you will see cheap deals again. This is not likely to happen for a while yet. Currently the BOE base rate is 4.25%, and not shown on the chart above.
Compare interest rates to pre-covid. When they return to those levels, you will see cheap deals again. This is not likely to happen for a while yet. Currently the BOE base rate is 4.25%, and not shown on the chart above.
Unlikely. Everything, everywhere is costing more because inflation is what over 30% these past couple years if you compound it as you should? EVs and tax incentives distort the market and are a different kettle of fish so let's ignore them for now.
Interest rates would need to drop close to zero again- likelihood of that? The expectation is perhaps 2.5% interest rate in 2025. The cheap money, zero interest conditions we had for 15 years is never going to repeat - a truly once in a lifetime thing. So that means leases will always factor in higher costs for finance.
So inflation (which doesn't generally reverse - your Walkers Cheese n Onion crisps will never cost 8p again) skyrocketing, plus interest rates never ever being so low, mean the answer is NO to cheap leases in general.
There will always be quirks and local fire sales. VW has too much stock of a Golf model, they slash the price for 2 weeks because it's cheaper to keep the factory running, people employed and supply chain moving. So if you're quick you snag a deal. Or a dealer pre registered to his targets, now needs to shift. Etc etc. The odd deals.
Other quirks are Chinese or US subsidising their cars (BYDs, Teslas etc). Again, this is market distortion but it happens and could mean some models for certain periods are just cheap to lease because nations are fighting in the background at world dominance of the new auto market.
If interest rates dropped magically to zero, you could get lease deals at the same percentage (eg 20% total value of car), but you will be paying more in raw cash because everything everywhere costs more because of inflation. So again no you won't get the pre pandemic price in this scenario.
So yes to odd deals for the keen shopper. Otherwise, I say pre pandemic prices are now a dream/fantasy. The market has irreversibly changed due to reckless government and central bank behaviour.
Happy leasing!
Interest rates would need to drop close to zero again- likelihood of that? The expectation is perhaps 2.5% interest rate in 2025. The cheap money, zero interest conditions we had for 15 years is never going to repeat - a truly once in a lifetime thing. So that means leases will always factor in higher costs for finance.
So inflation (which doesn't generally reverse - your Walkers Cheese n Onion crisps will never cost 8p again) skyrocketing, plus interest rates never ever being so low, mean the answer is NO to cheap leases in general.
There will always be quirks and local fire sales. VW has too much stock of a Golf model, they slash the price for 2 weeks because it's cheaper to keep the factory running, people employed and supply chain moving. So if you're quick you snag a deal. Or a dealer pre registered to his targets, now needs to shift. Etc etc. The odd deals.
Other quirks are Chinese or US subsidising their cars (BYDs, Teslas etc). Again, this is market distortion but it happens and could mean some models for certain periods are just cheap to lease because nations are fighting in the background at world dominance of the new auto market.
If interest rates dropped magically to zero, you could get lease deals at the same percentage (eg 20% total value of car), but you will be paying more in raw cash because everything everywhere costs more because of inflation. So again no you won't get the pre pandemic price in this scenario.
So yes to odd deals for the keen shopper. Otherwise, I say pre pandemic prices are now a dream/fantasy. The market has irreversibly changed due to reckless government and central bank behaviour.
Happy leasing!
Edited by silent ninja on Saturday 15th April 10:26
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