Is now a good time to buy a car?
I’ve been getting asked frequently, “Is now a good time to buy a car?” The short answer is yes. Now there is a huge opportunity to purchase a vehicle and get a great deal from a value standpoint.
Generally speaking, anytime is a good time as long as you are educated in the matter, but most buyers are not.
Coronavirus and cars:
Buying a new car during the coronavirus pandemic can be an opportunity to negotiate a great deal.
Most consumers are scared to come out to the dealerships, therefore, car sales are down drastically.
This drives dealers to be amicable and likely to negotiate a car deal, rather than stand their ground on pricing. Now they will make more concessions as long as they are selling a unit so that they can cover expenses: personnel, inventory floor plan, and rent, among other things.
Lenders also make great offers and have a tendency to approve more deals. Previously, they had the luxury of being more selective. Lenders are part of the ecosystem, so when car sales are down so is the number of new loans which is their income (interest charged on outstanding principal balance).
Lastly, the automobile manufacturers are also at risk within this ecosystem. This forces them to offer more incentives on new cars in order to move the needle on the car sales market.
The consumer is the ultimate beneficiary of this environment, especially if they know what they are doing during the vehicle purchase transaction.
Dealers are having to streamline their different processes making the purchase experience a much smoother transaction.
Expect social distancing-related rules, similar to visiting the local supermarket. Some dealerships are scheduling by appointment only.
The consumer price negotiation through the different steps of the process continues to exist; price of the car being purchased, trade value, lending terms and optional products.
Is this recession like the last recession?
The coronavirus recession is not like any other one.
There are a variety of reasons for which economic downturns occur.
The most recent one – December 2007 through June 2009 – was related to the mortgage crisis. It unveiled toxic lending practices that reverberated throughout the economy. A rise in unemployment, high gas prices and difficulty in securing loans made buying a car challenging.
The coronavirus recession is very different. Gas prices are very low. Credit is readily available because lending practices are in order. On the downside there is a temporary spike of unemployment and also a temporary pause on the world economy because of the “Stay at home orders.”
The keyword is temporary and the investors know this.
The stock market was due for an investor psychological correction which may have been prolonged and damaging to the economy. The coronavirus pandemic has avoided this slow demise causing a downward jolt, leaving no option but to bounce back up.
So far what you see is credit availability for the purchase of new cars. Automakers aiding with great incentives such as 0% financing for 84 months and oftentimes combined with a deferred first payment.
Dealerships are offering convenient transactions with safety in mind.
On the other hand if the “Stay at home orders” are prolonged, it could mean a turn to the worse for the economy, automakers and buyers included.
At this time, it would seem that the circumstances will be short-lived and soon there will be a bounce back up.