Leasing More Attractive Due to Higher Resale Values

Shorter leases, lower monthly payments, and higher residual values for used cars are luring consumers to leasing in growing numbers.

When you lease a car, you're essentially paying for the depreciation cost. Since residual values have been going up, leasing has become a more attractive option.

The average length of a lease dropped to 41 months, which is much shorter than the 64 months of the average car loan.

Leasing is especially popular with luxury-car shoppers.

More than 59 percent of shoppers who chose Mercedes-Benz decided to lease the vehicle. For BMW, the figure was 57 percent.

It's important for consumers to make an informed choice between buying and leasing.

If the monthly payment is the same for buying as it is for leasing, and if you can handle the longer contract term - typically five years for purchase versus three years for a lease - you're still better off buying.

You wind up owning the car at the end of five years. And at three years, you at least have equity in the car.

If you do lease, it's recommended that you stick to a maximum of 36 months so that the vehicle will always be under the included bumper-to-bumper factory warranty.

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