Lenders eye expanded leasing options as affordability challenges grow

Extra-long car loans can lower consumers’ monthly payments, but they also keep dealers from selling vehicles to those customers for as long as eight years. “We have a lender that will do 96 months. … We want to have that trade cycle much faster. Leasing is ideal for us,” said Scot Hensel , finance director at Kunes Auto Group , during a session at the recent Auto Finance Summit East. While some are leaning into these longer terms, retailers including Hensel and lenders industrywide are eyeing expanded leasing options to lower monthly payments and get customers back to market faster. Lenders and consumers should consider “leasing, especially for new cars,” Nissan Motor Acceptance Co. President Kevin Cullum said during a fireside chat at the event. Sustained affordability pressures , he said, are “going to help leasing.” [caption id="attachment_58361607" align="aligncenter" width="2048"] Kevin Cullum, president of Nissan Motor Acceptance, speaks in a session at Auto Finance Summit East 2026. (Auto Finance News)[/caption] “It will open the doors for people,” he said “[Instead of] going downstream on vehicles because of affordability, they will be able to go upstream or at least stay where they have historically been.” When surveyed, 72% of 59 credit union staffers said they expect members to choose a vehicle lease over a loan in the next six months, according to a Credit Union Leasing of America study published June 3. NMAC projects that its leasing portfolio will grow to $2 billion to $3 billion in 2026, Cullum said, noting that industry leasing share could return to or exceed 25%. Current leasing volume has yet to catch up with industry leaders’ optimism. New-vehicle leasing penetration dipped year over year to 24.1% of the market in the first quarter, down from 25.78% in Q1 2025, according to a May 27 Experian report. Total auto lease penetration Q1 [caption id="attachment_58361956" align="aligncenter" width="1798"] (Courtesy/Experian)[/caption] The rate at which leasing rebounds depends on whether there is a “strategic shift in how incentives are being spent” to encourage leasing, Cullum said. Manufacturers’ incentive spends made up 6.9% of a vehicle’s average transaction price in April, the most recent data available, up from 6.8% of ATP in April 2025, but down from 7.2% of ATP in March, according to a May 11 Cox Automotive report. Affordability lever Some 98% of surveyed credit union staffers said their members lease vehicles because of “leasing’s combination of affordability and flexibility,” according to CULA. In a bid to lower leasing payments, NMAC expanded its lease terms for consumers to 48 months from 36, Cullum said, without providing specifics on when the term was extended. Industrywide, the average lease term ticked up to 36.66 months in Q1 from 35.88 months a year prior, according to Experian. The biggest driver for leasing is lower monthly payments, Cullum said. “The term [is not] necessarily the reason they are not leasing; ultimately it is all about the payment,” he said. "Ultimately it is all about the payment." -- Kevin Cullum, NMAC Average new lease payments rose 3.2% YoY to $619 monthly in Q1, according to Experian. By comparison, the average loan payment on a new vehicle increased 2.9% YoY to $770. However, dealers might find resistance in boosting lease deals because finance and insurance departments see bigger profits with loan service contracts, Kunes’ Hensel said. [caption id="attachment_58361957" align="aligncenter" width="2048"] Scot Hensel, finance director at Kunes Auto Group, speaks during Auto Finance Summit East 2026. (Auto Finance News)[/caption] EV leasing EVs have been a bright spot in the leasing market, according to Experian. Leasing made up 46.1% of total EV purchases in Q1. Although it’s down from 60.6% in Q1 2025, leasing was still the most common purchase method for the segment. [caption id="attachment_58361958" align="aligncenter" width="1809"] (Courtesy/Experian)[/caption] Volkswagen Financial Services (VFS) is exploring how to better deploy EV leasing and lending, CEO Ernst Jan Van Eijkelenburg said during Auto Finance Summit East, adding that EV leasing is undervalued in the United States. Used EV values might stay steady or rise over the “coming five to six years” as their batteries increase in value and capacity, helping extend the vehicle’s lifespan, he said. “There’s a bit more demand [for EVs] due to gas prices,” he said. “But it’s also about channel management. … How can we leverage a variety of channels to make sure we are not destroying that asset?” [caption id="attachment_58361959" align="aligncenter" width="2048"] From left: Auto Finance News CEO JJ Hornblass and Volkswagen Financial Services CEO Ernst Jan Van Eijkelenburg at Auto Finance Summit East 2026. (Auto Finance News)[/caption] VFS’ leasing penetration averaged 45% in 2025, with its luxury brands’ leasing penetration averaging 50% — both flat YoY, he said at the summit. VWF to launch used-car leasing Volkswagen Financial Services also will offer used-vehicle leasing on a 36-month term , Eijkelenburg said during the summit, without providing specifics or a timeline. Enthusiasm for used-vehicle leasing was echoed by NMAC’s Cullum, who said there is “an opportunity for leasing on” certified pre-owned (CPO) vehicles. Despite captives’ interest, used-vehicle leasing makes up 0.26% of all used-vehicle purchases, according to Experian. Once VFS launches its used-vehicle leasing program, it will join a small group of captives with similar programs, including American Honda , which launched CPO leasing for Honda and Acura models in December 2024. While Acura and Honda leasing made up 25% and 45% of new-vehicle purchases respectively, leasing “is a very small percentage of CPO business across the industry,” American Honda Director of Auto Remarketing and Flet Operations Daniel Rodriguez told AFN . He did not provide the share of consumers leasing Acura or Honda vehicles in 2025, nor how it changed from 2024. CPO sales and leasing are especially popular with younger consumers who have not bought a vehicle before, Rodriguez said, noting that 70% of Gen Z prefer a used vehicle to a new, and almost one in three of Honda’s CPO customers are under 35 years old. “Used vehicles serve as an important gateway to our brand,” he said. “CPO sales are also an important part of Honda and Acura buyer loyalty, with nearly half of our CPO buyers coming back to purchase another Honda or Acura vehicle.” Off-lease opportunities Meanwhile, as vehicles come off lease this year, the market will be flooded with 2.4 million vehicles returning to the market, which will feed CPO vehicle inventories, America’s Car-Mart Senior Director of Acquisitions and Remarketing Doug Turner said during a presentation at the event. “It’s very important to make sure [CPO vehicles are] part of a strong portfolio,” he said. They “command a higher margin and they have lower default rates.” CPO vehicles also carry lower acquisition costs and minimize portfolio risk with warranty coverage , he said. As lenders navigate rising vehicle prices, providing affordable leasing and CPO products will become more important, Joanna Dean , vice president of sales at Hyundai Capital America , said during the summit. “How do we make sure that we have good leasing options? How do we make sure that we have certified pre-owned flexible solutions for all those lease maturities coming in over the next year [to] year and a half?” Dean said. “We have been very successful at conquesting and retaining a good chunk of our new-vehicle sales … so how do we support the other areas?” Find more coverage from Auto Finance Summit East 2026 here .

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Lenders eye expanded leasing options as affordability challenges grow

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