Leasing a new vehicle could get more expensive — if you can get a lease at all.
Automakers' financial arms are cutting back leasing programs. Falling used vehicle values, especially for big pickups and SUVs, have caused losses on current leases. Also, the overall credit squeeze is making it harder for the companies to borrow to finance new ones.
Coping with lease problems:
•Chrysler. The company's financial unit will suspend offering any new leases on Friday. Dealers who want to offer leases will have to line up their own financing deals.
About 20% of new Chryslers, Dodges and Jeeps are leased, and hard-pressed dealers are unhappy.
"It's not going to help," says Adam Lee, president of a group that includes two Chrysler dealerships in Maine. He says he's working to line up an alternative financing source for leases.
•Ford Motor.f Lease rates will rise on big vehicles as Ford Credit revises down its estimates for their value at the end of the lease. In second-quarter earnings posted last week, Ford wrote down more than $2 billion on leases made by its financial unit, because of falling resale values.
•General Motors.gm GMAC, the financial services firm co-owned by GM and Cerberus Capital, says it has been weeding out riskier credit customers in the past year. On Friday, it'll stop offering discounted leases to GM's Canadian customers but has no immediate plan to extend the ban to the USA.
•Nissan.nsany CEO Carlos Ghosn told Reuters this month that the automaker had been surprised by the reserves it needed to set aside to cover potential losses from its leasing due to overly optimistic estimates of used car prices.
"Panic is setting in because of the huge decline in the values of trucks and SUVs," says Jonathan Banks of Automotive Lease Guide, one of the services that estimates depreciation of the value of new vehicles — the so-called residual value at lease-end that is used to figure what the lease payments need to be.
As a result, Banks says, "It's going to be harder to lease a car."
Some consumers who leased big SUVs before gas prices shot up are trying to dump them through online services. One New York SUV lessee is offering $4,000 on Swapalease.com to anyone who'll will assume the $665-a-month lease through April 2010, on a 2007 GMC Yukon XL. There're a lot of drivers "who want to get out of their leases," Swapalease President Richard Joseph says.
Current lessees aren't affected by the cuts — and could benefit. Unwilling to offer new leases, but wanting to keep the customers, Chrysler will waive the $300 lease-end fee if a customer buys that vehicle and add a $750 cash incentive if he or she buys a new one.