General Question

Snoopy's avatar

Is GM going to stop leasing vehicles?

Asked by Snoopy (5798points) August 24th, 2008

Or are they going to limit leasing to only certain models?
If so, which models?

Observing members: 0 Composing members: 0

21 Answers

robmandu's avatar

on what premise do you base this question?

It’s nicknamed “fleecing” for a reason… it’s highly profitable. Why do you think GM (or anyone else) would quit it?

Snoopy's avatar

It isn’t profitable if they can’t get the used vehicles sold when they are returned.

I am not a fan of leasing. My in laws, however, are…..and I am asking this on their behalf. My husband remembers reading this in a car magazine…..but he isn’t sure which one….

Any info or a reference would be most appreciated.

Snoopy's avatar

FYI, Chrysler stopped leasing vehicles 8/1/08.

kevbo's avatar

One of the head GM guys was on Charlie Rose last week and said they are going to significantly scale back leasing, in part, because depreciation has been accelerated for larger, less fuel efficient vehicles (which are typical candidates for leasing). Also, I believe the so called credit crunch is having an impact.

Scrumpulator's avatar

It’s almost like asking if banks are going to stop giving out home loans, is it not?

Snoopy's avatar

@kevbo Thanks…..

@scrump… not really. Chrysler, for example, isn’t going to stop financing altogether…..just the leasing part. They will still loan you money for your new purchased vehicle.

robmandu's avatar

Thanks for the link, @snoopy.

That is interesting.

If I had to guess on why they were having a hard time selling the used leased vehicles, well, look at the brands.

When someone leases a vehicle, they’re basically paying for that car’s depreciation (plus overhead and profit) over the term of the lease.

Most American-branded cars depreciate substantially more than foreign competitors the first day they’re driven off the lot, and they depreciate faster over time.

Example, I’ve heard of Cadillac lease rates over $700/month. That’s substantially more than a 5-year, 6% APR car payment on a $33,000 vehicle. Granted, most Caddies cost more than $33K, but you’re only supposed to be paying the depreciation on the thing over something like 2 years.

It’s interesting to me that the article cites lackluster sales of used lease vehicles as the key factor. Somehow, I doubt that’s the whole story. I’d like to think consumers are wising up to the “fleece” game and that it’s just not competitive for GM and Chrysler to offer that service themselves.

One thing’s for sure… if you want a good deal on a Cadillac, buy it used.

allengreen's avatar

GM, Ford, and Chrysler will all be insolvent without a Government bailout. Love those free markets….

Snoopy's avatar

Ahem. Thanks for all the comments thus far.

I am still hoping that someone will share any info/references regarding the original question asked.

robmandu's avatar

The article you provided says…

“The financial arms of Chrysler LLC and General Motors Corp. are getting out of the business of leasing vehicles…”

“A GMAC spokesman would not confirm the change, saying there is no public announcement at this time.”

“Dealers wanting to offer the leasing option would have to find their own source of financing…”

That last point is key. There are plenty of third-party leasing agencies that will help you lease a new car from any dealer/make.

It’s not that you won’t be able to lease a GM/Chrysler at all… just that you’d hafta secure lease financing from other sources. I’m sure the dealerships will be all over assisting you with this.

In short, I expect no noticeable impact to consumers.

Snoopy's avatar

Thanks rob.

Snoopy's avatar

UPDATE: So here is the deal. My in laws’ lease is up 1/09. We were going to buy out the lease on a Pontiac G6, MY 2006.
The info they finally got from the dealer is, they can only break the lease 1 or 2 months early. At a penalty understandably….but only if they agree to BUY a vehicle. If they “re-lease”, it will be at 16% (cough, hack, wheeze) financing, minimum lease 5 (cough, cough) years.

So… is looking like the in laws will be buying out the lease.

(they likeD leases so as they don’t have to service the vehicle and they get a new car every 3 years…..not my cup of tea, but whatever….).

Anyone want to sell us a car? :)

allengreen's avatar

i think rob is totally wrong

robmandu's avatar

@allen, how so?

Example of how I’m right.

allengreen's avatar

Try and get an approval for a lease on a GM. It is like getting home financing now. Loans are advertised, but rarely consumated.
The lease will soon be a happy memory, a tribute to surburbia and peak oil and peak credit.

robmandu's avatar

@allengreen… ah, I see.

I figured that third-party leasing companies would just raise the monthly lease payment to offset whatever’s needed to recoup the sale of the used car on the back end.

allengreen's avatar

credit is really tough to get and will get much tougher before it gets better

petethewop's avatar

dont buy that shitty g6 return that thing and go to bmw
yeah you can lease through gm now but the prices are huge 36 month lease for and loaded escalade was over $2000 through a thrid party bank they dont want you to lease because the copany shit the bed. I spoke with some one in gm coporate and now that the fdic is going to give them even more money april 1st they are going to start leasing again trough gm. So in a few days when April starts you should get some real good lease rates, unless they try and pound it in our ass again, if they do no one will lease gm anymore and hopefully they go out and close there doors on there overpriced junk denali“s and escalades.

Snoopy's avatar

Update We got a 2005 MonteCarlo SS Supercharged, at a great deal used….from a Chrysler dealer. We love it….

msright1981's avatar

I think they might by now as they are going out of business.

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