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Leasing has traditionally offered car buyers a relatively affordable way to drive a new vehicle every few years, typically with a lower monthly payment than financing a purchase. But automakers are subsidizing fewer leases than they did before the Covid-19 pandemic.
“We’re having fewer people leasing overall, as you have fewer incentivized programs from automakers making leasing look attractive,” Ivan Drury, director of insights at Edmunds, tells CNBC Make It.
The pullback has helped push leasing well below its pre-pandemic level. Leasing accounted for 18.4% of new-vehicle transactions in the second quarter of 2026, down from around 30% before the pandemic, according to new national data provided to CNBC Make It by Edmunds
The decline dates back to the pandemic-era vehicle shortage, when automakers had fewer cars to sell and dealers had little reason to offer leases on vehicles they could sell outright for more, Drury say. The car shortage has since eased, but many of those lease programs haven’t returned.
With a typical lease, a driver makes payments to use a new vehicle for about three years and then returns it. That can be a better fit for someone who wants a new vehicle every few years than 72- and 84-month loans, which have become increasingly common among new-car buyers.
For drivers who like to switch to a new car every few years, financing instead can mean higher monthly payments for a vehicle they may not keep long term, Drury says.
Why lease deals haven’t fully recovered
Before the pandemic, automakers regularly subsidized leases to help move new vehicles off dealer lots, with incentives that lowered monthly payments or reduced how much customers paid upfront. However, those incentives became less necessary when the pandemic-era vehicle shortage left dealers with fewer cars to sell.
The shortage has eased, but automakers have continued to limit inventory.
“Automakers learned a lot from the tighter inventories experienced during the pandemic from 2021-2023,” says Nick Mintzias, CEO of automotive platform DriversHub. “Keeping inventory lean, reduces such a reliance on discounting and incentives, including lease subsidies.”
The lease deals that remain have become more selective and model-specific, says Patrick Peterson, head of content at automotive data provider GoodCar and a former vehicle appraiser. Before the pandemic, shoppers could find attractive lease programs across a wider range of vehicles.
“Now, the most favorable programs are more likely to relate to vehicles with high inventory, unpopular configurations, outgoing model year,” he says.
Lease incentives remain relatively common among electric vehicles, though EV leasing has fallen sharply. About 47% of new EVs were leased in the first seven months of 2026, according to J.D. Power, down from 75% over the same period in 2025. The decline followed the expiration of a federal tax credit of up to $7,500 that leasing companies could claim on qualifying EVs and pass along to customers.
Even so, “EV lease incentives remain far better than gas vehicles in the 2026 market,” Mintzias says.
Why fewer leasing options matter
For drivers who want a new vehicle every few years, leasing can still offer lower monthly payments on popular models. In the second quarter of 2026, average lease payments were lower than finance payments for all three mainstream models analyzed by Edmunds:
- Honda CR-V: $496 leased vs. $665 financed
- Toyota Camry: $503 leased vs. $667 financed
- Ford Explorer: $580 leased vs. $835 financed
Lessees also put less money down on average for all three vehicles, the data shows. For the CR-V, for example, the average down payment was about $2,200 for a lease compared with $5,200 for financing.
But attractive lease offers aren’t as widely available as they were before the pandemic, which can push some buyers toward financing instead. That makes it more important to consider how long they expect to keep the car before taking out a loan.
“The key is matching the financing to how long you actually plan to keep the car,” says Mark Stancato, CFP and founder of VIP Wealth Advisors.
That’s because a 72- or 84-month loan can be a poor fit if a buyer decides they want another car after only a few years, he says. In that scenario, they might still owe a substantial amount on the loan even as the car has lost much of its value. That can leave them owing more than the vehicle is worth when they’re ready to trade it in.
Carrying that remaining debt into the next loan “can become an expensive cycle that’s difficult to break,” Stancato says.
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