When Long Islanders need a new car, almost six in 10 lease it, a rate more than twice the national average, according to consulting firm IHS Automotive.
Not everyone believes it's the most economical route to an auto. But many consumers view auto leasing as a way to drive with no down payment -- or a lower one -- and smaller monthly payments than if they had purchased the vehicle.
Another plus of leasing: Those who do it continuously, replacing one leased vehicle with another, are always driving a relatively new vehicle, usually still under a manufacturer's warranty, and one they won't have to worry about selling or trading in when it's time for a new one.Do your homeworkCar reviews, researchResearchFind a car dealer
Stony Brook podiatrist Rick Marotto and his schoolteacher wife, Kim, said that when they needed a new car, there was no question they'd lease it. "My wife and I like to update vehicles regularly," Marotto said. "I don't want to be bothered with any of the repairs and there's little maintenance with the lease."
Kim drives the Kia Sedona minivan they recently leased from Eagle Auto Mall in Riverhead and Rick drives a Kia Optima he leased two years ago.
Nationally and locally, leasing is growing in popularity. An estimate by IHS Automotive, based on registration data, says that nationally almost 23 percent of new cars are going out the showroom door under lease this year -- up 40 percent since 2010.
Another estimate, by credit data provider Experian Automotive, puts the national leasing percentage at closer to 27 percent, the highest since it began keeping records in 2006.
Long Islanders are far more likely to lease. IHS numbers show leases account for 62.5 percent of new vehicle deliveries in Nassau and almost 53.1 percent in Suffolk -- with the combined total of 57.8 percent, up 18 percent since 2010.
Expert sources like The Car Book, a consumer guide, and Consumer Reports say purchasing can ultimately be less expensive than leasing when the vehicle is held for a long time and is owned outright with no payments due. At the end of a lease, the consumer owns nothing.
Leasing, however, is particularly popular in areas such as Long Island that are relatively affluent and near a major city. New Jersey is another hot leasing area, and so are parts of Texas and California, says Experian.
More luxury models
One reason: More luxury models are popular in affluent areas.
"Leasing is about double for luxury brands," said Tom Libby, an analyst in the Detroit area office of IHS Automotive. "Your mix of luxury brands is going to be higher in Nassau and Suffolk than in some other parts of the U.S. The Northeast and the West Coast have a high leasing mix."
At Long Island's largest dealer chain, the 22-store Atlantic Auto Group based in West Islip, co-owner Michael Brown said that 60 to 65 percent of the 65,000 new vehicles a year the group delivers to customers are leased -- and for luxury brands such as Lexus and Cadillac, leases are closer to 80 percent.
"People are looking for more value and lower payments," he said. "They'd like to drive a better car for less money."
Jack Gillis, longtime Washington, D.C.-based author of The Car Book, suggests a possible psychological reason for the popularity of leasing in major metropolitan areas. "I guess it's sort of the mentality of the city mouse and the country mouse," he said. "The country mouse is more conservative, more careful with his money. But near cities, you have a population of folks that tends to be more competitive -- 'What kind of car do you drive?' "
Local dealers handling luxury cars peg the percentage of their customers who lease higher than the Island average. Expensive sticker prices make leasing more manageable in terms of monthly payments. Leasing rates are "pushing 70 percent," said co-owner Rob Certilman of Acura of Smithtown. "The more expensive the car, the more propensity for the buyer to lease."
And, he said, "I think the more interested people are in status, the more they lease because you can get so much more car for the same payment, and some people look at a car payment like they look at an electric bill -- you get one a month."
Mark Schienberg, president of the Greater New York Automobile Dealers Association, a regional auto dealers' trade group, says many of his luxury car members report leases accounting for 90 percent to 95 percent of their new vehicle deliveries.
Experts say relatively short travel distances also could be a factor in making leasing more attractive in congested metropolitan areas. Leases almost always have relatively low annual mileage limits -- 12,000 to 15,000 is typical, say local dealers.
"It's easier to stay within the mileage limits [in urban regions]," said Melinda Zabritski, senior director of Automotive Finance for Experian. While lessees can buy extra mileage up front or pay for it at lease end, that cost eats into the savings in monthly payments of a lease over a purchase. So do charges for excess wear and tear when the leased car is returned.
Steady increases in the price of new cars make leasing more attractive. The Kelley Blue Book, a price guide, says the average transaction price for cars and light trucks in the United States was $33,453 in July, up 2.6 percent just in the past 12 months, although some of the increase is from consumers opting for better-equipped vehicles.
Dealer Mark Calisi, who owns the Eagle Auto Mall where the Marottos leased their cars, says 80 percent of his Volvo customers lease, compared with 60 percent of Chevrolet and Mazda customers and 50 percent of his Kia buyers.
At Smith Haven Chrysler Jeep Dodge Ram in St. James, co-owner Brett Saslow says 85 percent of the new cars and trucks he delivers with prices over $30,000 are leased rather than sold. "I can't remember the last Jeep Grand Cherokee that I sold," he said.
Manufacturers and dealers like leasing because, when the term is up, the customer will come back with the car and the dealer has another chance to make a sale to that customer.
But some car dealers say leasing has a downside for their service business: The relatively new cars tend to need fewer repairs.
Leasing does lower monthly payments. The Marottos are paying $425 a month to lease the $31,753 Sedona for 36 months, with a $2,500 down payment -- known in leasing parlance as a "capitalized cost reduction." That money includes a Suffolk County sales tax of 8.625 percent on the portion of the vehicle's value the Marottos are purchasing.
A 36-month purchase, at the same 2 percent interest rate and with the same down payment, would have cost them $920 a month, not including sales taxes, which would be paid up front. Even stretched out to 48 months, the loan payment would be $697 a month, plus sales tax.
The vehicle's "residual value" -- what it's projected to be worth in three years, is $17,922. Although they don't plan to, the Marottos can buy the car at lease end for that amount, if they wish. If they opt to finance that purchase, they'd pay $400 a month stretched over another four years, raising the total cost of the $31,753 Sedona to $37,000, not including sales tax, which would have to be paid upfront.
For small-business owners, leasing has long had another attraction -- greater tax deductibility than the depreciation allowance of a purchased vehicle.
Computer security consultant Michael Fiore of Smithtown falls into that category. He drives low miles and, as he views it, avoids the hassle of expensive repairs as cars age. He leased a $42,000 2014 Toyota Highlander Platinum Edition for 36 months at $597 a month from Smithtown Toyota a year ago and is taking advantage of a Toyota offer of free oil changes and tire rotation for two years.
"When you hold a car for two or three years, all the maintenance is covered and practically nothing major goes wrong with the car," Fiore said. "After four or five years, then you start with tires, brakes, timing belts and all that stuff. I avoid all that."