Despite all the cash being thrown on hoods nowadays, it appears the numbers still tilt to benefit leasing.

Swapalease.com recently shared new data that show lease payments would still be more attractive than installment contract payments even after dealers and finance companies instituted more aggressive incentives toward retail sales.

Swapalease.com conducted a loan-versus-lease comparison of the same vehicle with $30,000 MSRP and analyzed monthly payment options with varying residuals and incentive models.

The analysis is in response to a growing number of media reports that point to increased incentives on installment contracts and fewer toward lease deals. However, even when these incentives are applied, monthly payments are still lower on leases, which consumers favor, according to the site.

“The general perception of the industry is that growing off-lease inventory has caused used-vehicle inventory to rise, making it more costly for lenders to write leases,” said Scot Hall, executive vice president of Swapalease.com. “Even when these new incentives are applied, and used supply levels alter residuals, leasing remains more affordable for consumers.”

In the analysis, Swapalease.com compared a 60-month installment contract with a 36-month lease with a deal scenario negotiated “present day” that includes a lease residual of 50 percent, and a scenario negotiated “future” with a lease residual of 47 percent. This presents two scenarios that can show how rising used supply and lower residuals may impact higher lease payments in the future.

Swapalease.com also implemented a $1,000 incentive on the today installment contract against a $500 incentive on a today lease (50 percent residual). The analysis then upped the installment contract incentive to $1,500 on a tomorrow loan but kept the lease incentive at just $500.00 on tomorrow’s deal (47 percent residual) for further stress testing.

Source: Swapalease.com     

Dealers and captives not on the same page

A reduction in lease activity may hamper the dealer’s ability to move more inventory.

According to dealers in an online Swapalease.com survey in November, 68 percent said they would rather use incentives on leases, which may lower residuals over time, but still give them a chance to move more inventory every three to four years.

Conversely, only 32 percent of dealers said they’d rather use incentives on financing to preserve residuals on vehicles, even if it means the customer sales cycle slows to five to eight years when installment contracts mature or expire.