Leading vehicle lease marketplace Swapalease.com, has reported an interesting trend in the U.S., namely that lease credit approvals during the month of May stood at 60.6 per cent, the lowest monthly level of the year and down from January when the approvals rate was at 70.6 per cent.
Despite the overall approvals rating sliding down from a 2014 high in January, Swapalease.com attributes the recent slide to a significant higher number of applications over the last two months. In fact, 44.7 per cent more applications have been processed in May and April compared to the previous two months. Regardless, Swapalease.com considers the 70 per cent approval mark to be “healthy” for the marketplace.
What a difference a year makes. The year-to-date approvals rating so far in 2014 stands at 65.9 per cent, compared with 75.3 per cent the same time a year ago. In addition to a higher number of credit applications overall, Swapalease.com executives attribute the slide to an increased number of younger drivers with less-than-stellar credit applying to take over a vehicle after also being turned away at a dealership.
“Since credit is analyzed differently through a lease transfer and the monthly price has already been determined, many car shoppers look to simply take over an existing lease,” says Scot Hall, Executive Vice-President of Swapalease.com. “Particularly with student loan debt still at high levels, many younger car shoppers continue to face an uphill battle in seeking to buy or lease transportation.”
An increased appetite for consumer debt growth has also contributed to the falling approvals rate. According to the Federal Reserve as reported in Reuters, total consumer credit in the U.S. increased by $26.85 billion in April, to $3.18 trillion. Reuters also stated this pace of consumer debt was growing at a 10.2 per cent annual rate, an increase that must be taken into account when car shoppers apply to take over a lease.
