Lease Expiration

Long-term changes and trends in the economy are often hard to pick out among the tumult of the short-term ups and downs, but this year it is clear that major changes are taking place in the way people manage their spending. The best example, I think, is the change in the way people feel about auto leasing. Auto leasing was a widespread practice in the 1990s, but many of the people whose leases expire now will never lease a car again.

Auto leasing is not to be confused with rental cars. Travelers often rent cars for a day or a few weeks to get from one place to another, and that is not about to change. An auto lease is typically a 5-year commitment to a specific vehicle, usually a new car, with a large payment in advance and 60 regular monthly payments. Leasing was promoted as a less expensive and less risky alternative to buying a primary vehicle, but the lower monthly payments come with a price. At the end of the lease, the leasing company takes the car back, leaving you on foot again. Actually, if things go well, a lease costs much more than buying a new car, owning it for five years, then selling it (and with luck, getting back nearly half of its original value).

But it is when something goes wrong or something unexpected happens that auto leasing customers tend to discover what a bad deal they got. They find themselves stuck with bills they didn’t expect, penalties they didn’t know about — or just stuck, for 60 months, with cars they don’t want. No one can really predict or control the next five years of their lives, but people leased cars as if they knew exactly what would happen.

Now people are buying cars instead of leasing because it’s simpler. The simplicity of the transaction provides the flexibility people need to manage their lives, and that also makes it a safer bet than leasing.

The decline in auto leasing is part of a trend you can find in many areas of the economy. People are moving away from things that demand a lot of attention or are difficult to manage, toward things that are quick and simple and that won’t require any future actions. People are trying to simplify and streamline their lives so they can get more done in less time, and in some cases, they’re willing to pay extra for a simple solution. These are examples of other things that are being affected:


  • Record clubs
  • Music subscription services
  • Travel agents
  • Vacation timeshares
  • Application service providers
  • Debit cards
  • Insurance


  • Live music
  • Buying music online
  • Electronic ticketing
  • Theme parks, festivals, and fairs
  • Open-source software
  • Cash
  • Saving

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