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Millennials are turning to car leasing for cars they want but can’t afford

Millennials are not particularly known for owning luxurious cars. It’s not really a big surprise as Millennials are also known as the generation of “student loans.” They already have quite a bit of money problems, and purchasing luxurious vehicles isn’t going to help. In fact, according to a survey, a lot of Millennials would choose to bypass car ownership just as long as it means lower monthly payments.

About 1/3 of Millennial shoppers opt for a car lease. In the last five years, car leases among Millennials have surged by as much as 46%. Salt Lake City, Portland, Milwaukee, Minneapolis, and Grand Rapids are some of the places that are leading the surge. There seems to be a clear trend direction that’s developing in the car industry.

According to Jessica Caldwell, Director of Industry Analysis from Edmunds, most Millennials are fully aware of their tight budget, and the importance of sticking to it. Nevertheless, Millennials do understand the basic need of getting from point A to point B. Given a chance to drive a nicer car that fits well with their budget, they would gladly explore the option. In most cases, a nice car that’s on a lease is enticing.

These days, leasing a car makes sense if you want to keep your options open, drive new car models, and maximize cash flow. There’s just one problem. According to Edmunds, consumers still tend to live above their means. So, you still need to keep watch of your finances to make sure you are not making a bad decision.

Traditionally, with a $300 per month budget for car payments, you can buy a car that’s worth around $20,000. For leasing, the same $300 per month budget allows you to drive a car that’s worth $35,000. On the downside, you have to return the car after three years, and you don’t get to enjoy the zero payments that come with car ownership.

The Millennials and their favoritism towards car leasing are outpacing the total population in every vehicle type, with the exception of compact cars. Most are preferring expensive car brands like Cadillac, Jaguar, and Lexus. For trucks, Millennials tend to go for the new Ram Truck. According to the data, the Millennial generation is 30.5% more likely to lease compared to the general population.

Millennials also love to lease GMC. In fact, 36% of Millenials lease GMC. Lexus is also another favorite car to lease for Millennials. 65.5% of the Millenials are leasing it, while 30% of the population chose to buy the high-end sedan.

With this growing car leasing trend of the Millennials, it’s worth asking if the generation is more industrious than other generations are giving them credit for, or they are simply overextending their financial budgets. Like most things in life, only time will tell which is which.

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Jesse Taylor
About Jesse Taylor

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