Leasing's share of new-vehicle transactions has been recovering from its pandemic-era low, as buyers squeezed by high vehicle prices and elevated loan interest rates look for a lower monthly payment, according to Experian's State of the Automotive Finance Market data. Financing still accounts for the clear majority of new-vehicle deals, but the lease share is highest on EVs — partly because leasing lets dealers pass through a federal commercial-lease incentive that isn't available on a cash purchase in the same way for many buyers.
At a glance
| Metric | 2026 trend |
|---|---|
| Overall lease share of new-vehicle deals | Recovering from pandemic-era lows, still a minority of deals |
| Average new-loan APR | Elevated versus 2020-2021; roughly flat to slightly easing |
| EV lease share | Notably higher than the overall market average |
| Loan terms | Longer average terms remain common to manage payments |
Why leasing is back in the conversation
Leasing fell out of favor during the 2021-2022 inventory shortage, when dealers had little incentive to offer subsidized lease deals on cars that would sell at full price anyway. As inventory normalized and manufacturers began competing harder for volume again, leasing has recovered share — it offers a lower monthly payment than financing the same vehicle, which matters more when both vehicle prices and loan interest rates are elevated.
The EV lease anomaly
EV leasing has run notably above the market's overall lease rate for a specific structural reason: a commercial clean-vehicle tax credit can be applied by the leasing company (which technically owns the vehicle) and passed through as a price reduction, in ways that don't always apply the same way to a retail purchase, especially for vehicles or buyers that don't otherwise qualify for the credit. That's made leasing the more accessible path to a new EV for many shoppers, even after the retail purchase credit's rules tightened.
Finance still dominates, with longer terms
Traditional financing remains the majority choice, but average loan terms have stretched — 72- and even 84-month loans are common — as buyers manage higher vehicle prices and interest rates by spreading payments out. Longer terms lower the monthly payment but increase total interest paid and raise the risk of being 'upside down' (owing more than the car is worth) for longer.
How to choose between them in 2026
- Lease if you want the lowest monthly payment, don't drive high annual mileage, and like changing vehicles every few years.
- Finance if you want to build equity, plan to keep the car long past the loan term, or drive more miles than typical lease allowances (often 10,000-12,000/year) permit.
- For EVs specifically, compare the leased price against the cash/finance price after any applicable incentives — the gap can be larger than for gas vehicles right now.
- Watch loan term length — a lower payment from a longer term isn't free; it costs more in total interest.
An 84-month loan can make an expensive car feel affordable month to month while leaving you owing more than the car is worth for years — run the total-interest number, not just the payment, before signing.
Frequently asked questions
Is leasing more popular than financing in 2026?
Why do EVs lease better than gas cars right now?
What's the downside of a long auto loan term?
Is it cheaper to lease or finance a car overall?
Sources & further reading
- Experian — State of the Automotive Finance Market
- Internal Revenue Service — clean vehicle and commercial clean vehicle credit rules
Figures, prices and policy details were current at the last-updated date above. Automotive pricing, incentives and regulations change frequently — verify time-sensitive details with the linked primary sources. Read our editorial policy and fact-checking standards.
