Although the leasing industry isn't as lucrative as it once was, there are still reasons to lease a car. Maybe you are self-employed and can write off your car payment. Maybe you like driving a new car every two or three years. However, since leases typically offered a lower monthly payment than financing a new car, leasing used to be a way to get a luxury vehicle that you wouldn't otherwise be able to afford. That scenario is likely to change. As the credit crunch continues to take its toll on the economy, leases are likely to get more expensive and harder to find -; thus reserved for the most credit-worthy buyers.
Blame high gas prices for the decline in leasing. Lease payments are based on a formula that includes a car's residual value at the end of the lease term. In other words, when you lease a vehicle, you're paying for the depreciation of the car. As gas prices began to skyrocket, the projected depreciation of popular gas-guzzling SUVs was much worse than manufacturers projected. The difference between predicted and actual SUV residual values this year alone led to a $4.8 billion loss for domestic automakers.
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