Leasing Is on the Rise, But It May Cause Future Problems

There was a time, a decade ago, when leasing vehicles was almost taboo in Israel. Executives would be the only ones with car leases. The regular person would save up their money for a bank down payment and purchase a vehicle – new or used.

Debt has become the norm in today’s society, and this is reflected in reports that show Israelis are spending more on household debt.

Credit card companies and insurers are where most of our debt comes from. Consumer debt is rising, and as people grow accustomed to debt, we’re seeing a shift in people opting to lease vehicles rather than purchasing them outright.


There are a few reasons.

Leasing, as many people that opt for this option know, allows a person to drive new cars all the time. Still in its infancy in 2009, one of the biggest perks of leasing is the new car look and feel. People want to always be at the front of the pack, driving in their newer vehicles as a form of status validation.

We’re also seeing a lot of Israelis following in the footsteps of their United States friends who have leased privately at a rate of 80%.

Always having a new vehicle also provides peace of mind. Consumers will have to continually pay for their vehicle, often never opting to own the vehicle at the end of the lease. But the consumer also doesn’t need to worry about making any major repairs to the vehicle. If there are engine or transmission problems, it’s not a big deal because it’s an auto lease and not ownership.

Upgrading to a new car at the end of a lease leads to a lifetime of payments, never owning the vehicle that required a down payment and monthly payments per the terms of the lease.

Israel doesn’t post lease statistics until the end of the year so that it’s possible to determine if leasing is rising or falling.

But in the first few quarters of the year, 94,340 vehicles were delivered to consumers. This is four percent lower compared to the same time period a year prior.

Fewer consumers are purchasing vehicles, so they’re either leasing or opting for rideshare companies and taxis.

Leasing does make sense for some people. Lower out-of-pocket expenses are a definite benefit, but there are also the benefits of no upfront tax charges. Since the vehicle isn’t being purchased, it’s possible to avoid these upfront taxes, which add a significant amount of money to the purchase price of the vehicle.

As a parent, I try and encourage my kids not to lease vehicles.

Autos fall in value drastically once you drive them off of the lot, but leasing is costing you money for a vehicle that a lot of people may never own. Costs may be negated for maintenance tasks, but owning a vehicle allows you to avoid monthly debt.

A good vehicle can last decades if it’s properly maintained.

Leasing doesn’t make sense for many drivers because it’s an unnecessary debt, and if the vehicle isn’t purchased at the end of the term, it’s a debt that can be lifelong if the person leasing continues to upgrade.

About the Author
 Jacob Maslow is passionate about writing and has started numerous blogs and news sites. Jacob is originally from Brooklyn. He packed up his five children and made Aliyah in 2014. Jacob's experience and varied interests lend themselves to a diverse palette of topics ranging from technology, marketing, politics, social media, ethics, current affairs, family matters and more. In his spare time, Jacob enjoys being an active member of social media including groups on Facebook and taking in the latest movies. 
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