LAWRENCEVILLE, Ga.—Leasing has taken off post recession, and now additional carmaker incentives and rising interest rates are driving the need for new leasing strategies, a new analysis suggests.
Black Book has published a new white paper, Strategies To Help Maintain Profitable Leases In Your Portfolio, to held lenders compete in what is a changing leasing environment.
Available by clicking here, the white paper discusses the possible conflicting market pressures that may temper the increase in leasing activity for lenders.
“Leasing has been a critical part of the automotive industry, particularly since it helps to move inventory while keeping monthly payments low for consumers,” stated Black Book. “Furthermore, a healthy lease market can feed current demand for the certified pre-owned market and create more frequent shopper appetite for cars and trucks.”
But Black Book noted that slowing auto sales may fuel a rise in incentives to keep car shoppers motivated, and a rise in federal interest rates may threaten the ability for lenders to maximize profitability for leases in their portfolios.
The white paper offers examples of leveraging collateral data to show how certain vehicles may be candidates for longer lease terms as an alternative strategy to leveraging incentives, Black Book explained.
“This shift can help lenders identify the right vehicles for longer terms by showing the collateral’s rate of depreciation, whereby certain vehicles will hold a stronger opportunity for off-lease remarket after 48 months rather than the more traditional 36-month lease term,” the company said.