Will The Leasing Crash In The US Affect The UK?

Sunday, 10. August 2008

News from the US is worrying as Chrysler Finance make the first move to distance themselves from leasing by refusing to extend their lease business as a result of increased money costs and plunging residual values of their gas guzzlers. GMAC and Ford Motor Credit are likely to follow suit by reducing the amount of lease business they write. The projections are that other funders will follow their lead. This will have a dramatic effect on the market in the US as leasing accounts for 26% of auto car sales. Will this have an effect in the UK? No doubt it will as sub-prime mortgage problems in the US affected mortgages in the UK. If the leasing companies are worried about leases costing them too much this must be good news for those that lease their cars because it generally means that whilst the leasing companies make losses those that lease gain, so once again I bang the drum and say get out of the cars you own and get into a car that you lease, why risk your money whilst the leasing companies can still risk theirs? Martin Lewis, director general of the British Vehicle Rental & Leasing Association said much the same when asked about the effects of the credit crunch on the car finance industry. He also added that the leasing industry in the UK whilst drawing back a little still has plenty of funding at competitive rates so underwriting is not as tough as other forms of funding. So yet another reason to consider leasing. By Graham Hill