With coronavirus (COVID-19) cases in the U.S. growing exponentially, each of us can do our part to “flatten the curve” of this pandemic. By staying home, we’ll reduce the burden on our hospitals and save countless lives.
We also know that many are facing economic uncertainty during these difficult times. With over 4 million car leases expiring this year, people understandably have questions about their leases and what they can do in this situation. Here are some answers to frequently asked questions.
CAR BUYING & LEASING
1. Can I still buy or lease a car during this pandemic?
The short answer is yes. Most dealers have scaled back their operations, while others have closed entirely. But if you’re in need of a car, it’s possible to shop online and arrange contact-less delivery. Dealers and brokers are still posting new deals on the Leasehackr Marketplace for immediate delivery.
2. How does online buying and contact-less delivery work?
Online car shopping has existed for years, well before this pandemic. In fact, the dealer representatives and brokers who post on Leasehackr Marketplace work primarily through email and phone. There is no in-person negotiation involved.
In essence, you agree on the deal and the exact vehicle before setting foot inside the dealership. You complete the credit application online. When you show up, the vehicle is fully prepped, you sign the lease contract, and drive off in your new ride.
Contact-less delivery, on the other hand, is relatively new, but dealers and brokers are adapting to make it possible. For example, you could request to sign the lease contract in a separate room, without the F&I manager present.
Multiple dealer reps and brokers on Leasehackr Marketplace have always offered home delivery, and we expect this practice to expand during these times.
3. Is this a great time to buy a car? Are there coronavirus specials?
Nearly everyone is facing hardship from this pandemic, including the millions employed by the global automotive industry. Dealers across the US have laid off much of their staff, leaving behind a skeletal crew. Expecting a deal out of this crisis probably isn’t the right attitude right now.
Will the deals be amazing? Nobody knows for sure. Here are some trends to keep in mind, though.
Manufacturers have cut back on production; plants are closed. While dealers may be sitting on tons of inventory now, they may also be stocking up for the coming few months.
Most Leasehackr-worthy deals are “losers” for dealers, meaning the dealer sells the unit at a loss – in order to chase a volume bonus. We’re seeing reports that dealers are now increasingly focused on maximizing profit per unit, rather than chasing volume. With fewer cars to sell and fewer people buying cars, offloading a few “loser” deals to reach an ambitious volume target may be less palatable to dealers. Unicorn deals may become more rare.
There may soon be more support from the manufacturer, in terms of rebates, incentives, and dealer cash. Expect more offers like GM’s interest-free financing for 84 months. However, incentives could also depress residual values over time – which makes leasing less attractive.
During the financial crisis of 2008, automakers mitigated risk by focusing more on incentivizing traditional financing than leasing. We could see the return of this trend.
4. Can I terminate my lease? Is there payment relief?
We have not seen any instances where a captive or other leasing institution allowed a lessee to simply terminate their lease contract because of COVID-19. Consumers are still bound by the terms of their signed contract. There are no “deals” to be had in this respect.
However, many manufacturers have established programs or policies that allow lessees to defer payment – although they will still have to pay the amount owed eventually. Some have deferral programs specifically for those who lost their jobs or became sick during the pandemic. The best thing to do is to contact the finance company directly.
5. My lease is ending soon. What can I do?
Automakers have a range of policies, including lease extensions, grace periods, and home pick-up. These may be on a case-by-case basis, so it’s best to contact the finance company directly to explain your situation.
If your current lease is a great deal, it may be worthwhile to extend your lease – and ride it out for as long as possible – but note that, depending on the state, you may have to pay another year’s worth of DMV registration renewal fees.
COVID-19 RELATED LEASING NEWS
BMWFS has halted lease transfers:
GM Financial is offering an automatic one-month lease extension:
Carvana, VROOM, and Shift have temporarily stopped buying cars directly from customers, unless if you buy a car from them (i.e., trade in). This is unfortunate because some folks have lease equity they were waiting to cash out on:
The ecosystem of lease returns has halted:
Most financial institutions are allowing deferred payments, even if they don’t publicly advertise it:
This FAQ will be updated over time. Content is synthesized from our fantastic and knowledgable forum members. You can find active discussion topics tagged “COVID-19” here.