Buying A Car During A Financial Crisis. It's A Buyer's Market ... Here's What To Do
(Note: This was written in 2009 during the Financial Crisis but now applies again due to plummeting car sales caused by the Coronavirus Crisis. Please follow the links below, whether for either new or used cars, to learn both how to get the absolute best deal at such a time as well as how to do it with minimal person-to-person contact.)
The auto industry has been one of the hardest hit in the midst of this financial crisis. Released sales figures have consistently shown massive sales losses across the board.
Even steady-growers and market leaders such as Honda and Toyota have suffered shocking declines from the levels of previous years.
While it's not the point of this article to go into all the numbers, suffice it to say the the American carmakers were also hit by similar setbacks. Overall, industrywide sales have fallen to the lowest levels in 25 years.
Dealers Are Suffering, Leading to Outstanding Buys
And sales appear to be heading still further south following a brief upturn during Cash For Clunkers. Showroom visits have dried up once again. There's also been a spike in dealerships going bankrupt or simply shutting down this year, with many more expected.
And car dealers are continuing to suffer being the victims of a double whammy right now. Not only are they being hit with declining sales numbers (some the worst in 25 years), but their operating costs are also rising due to expensive finance charges on unsold vehicles. The more cars that remain unsold, the higher their financing costs.
And many vehicles on car lots have been growing cobwebs, sometimes sitting unsold for months. The result: fewer sales AND higher costs ... ouch!
But there is some good news. Actually, there's good news for car buyers ... which we'll get to in a moment. But first, here's another major development caused by the financial crisis.
Car Repossessions Are Going Through The Roof, Again Bringing Opportunity
By now, we're all pretty familiar with the mortgage crisis and the unprecented number of home foreclosures nationwide. However, getting less media coverage is the fact that record numbers of people have either had their vehicles repossessed or have voluntarily turned them in to their lenders.
Local banks and credit unions across the country are now flush with repossessed autos, many of which end up at public car auctions.
And many of these vehicles were initially purchased in the last two to twelve months, just as the worst of this crisis has been hitting the fan. The point is, there are many nearly new vehicles being sold at big discounts by lenders.
Even state government agencies have seized cars from failing dealerships in default of state sales taxes. Again, many of these vehicles are being auctioned to the public at discounted prices.
What's more, it is likely there are many more repos in the pipeline. Experian Automotive reports that there is currently nearly $25 billion in auto loans that are past due.
Two Car Buying Strategies That Are Saving Thousands Right Now:
New Cars: New car dealers are desperate for sales. They have to get large numbers of vehicles off the lot to reduce their finance charges if they are to survive. New cars are being sold routinely at invoice prices right now to accomplish this. And with some modest bargaining, we're seeing many vehicles being sold far below invoice prices.
Here's an article that outlines exactly how to get the best deal right now.
Used Cars: There's just outstanding prices right now when you get multiple car dealers to compete for your business ... and there's a very easy way to do it.