Wednesday, July 30, 2008

Chrysler deathwatch?

It looks pretty bad when your own finance company won't offer leases for your cars. Now Chase has said that they will not provide leases for Chrysler cars either. Now I have never been a supporter of leasing a car because I've never seen the financial sense of doing so, but this is very bad news for Chrysler.

These finance companies make a living by "predicting" the future by guessing at what a car's residual value will be at the end of a lease's term. By not financing leases they are basically saying that the residual (resale) value of a Chrysler car two or more years from now will be so bad that it is too risky to issue financing. Normally they would just adjust the payments higher in order to make up for any potential deficit at the back end but they can't price the monthlies high enough because the car market is so bad right now.

The Grim Reaper's grasp tightens......

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