Memorial Day car deals are luring buyers back into the market
A sign advising customers to practice social distancing is displayed on the door of a General Motors Co. Buick and GMC car dealership in Woodbridge, New Jersey, on May 20.
Angus Mordant | Bloomberg | Getty Images
Coronavirus pandemic aside, it’s not a bad time to be in the market for a new car.
With the three-day Memorial Day weekend marking the first big sales push since the Covid-19 crisis took hold in the U.S., buyers can expect to find deals aplenty as states start to reopen and dealerships look to rebound from a dismal month.
In April, as the full effects of the Covid-19 pandemic were being felt, overall retail auto sales plummeted 53% from a year earlier, according to Cox Automotive estimates.
Yet Memorial Day sales are attracting buyers: Research from Cars.com shows that a third of consumers who are in the market for a car plan to shop this weekend.
More from Personal Finance:
Post-pandemic, remote learning could be here to stay
Robocalls spiking as fraudsters prey on Covid-19 fears
More relief could be coming for student loan borrowers
“We’re seeing a lot of deals now, and shoppers are coming back into the market,” said Kelsey Mays, senior consumer affairs editor at Cars.com.
At the same time, you can expect some changes. In a business known for its personal interaction through the sales process, Covid-19 has forced many dealerships to move much of the sales process online.
“The transaction has usually been completed in person, but a lot that is changing as many dealerships had no choice but to move things online when businesses were shut down,” said Jessica Caldwell, executive director of insights at Edmunds.com.
New car financing
“Most are open now, although they may not physically open their store,” Caldwell said.
Some dealerships allow shoppers in their showrooms by appointment, while others may bring a car to you for test-driving and then complete the transaction online.
If you see a car you like at a particular dealership, whether online or on the lot, start by calling or emailing to find out how the dealer is handling sales.
“I’d advise starting the process early,” Caldwell said. “Don’t start Sunday for a deal you want to do Monday.”
She added that she expects the deals — which begun in earnest in late March — to continue beyond the Memorial Day weekend. “The deals aren’t going to disappear,” she said.
Used car financing
Edmunds experts expect some of the best deals to be found on pickup trucks and SUVs.
For 2020 models, full-size trucks have an average discount of 13.4%; mid-size SUVS, 11%; and subcompact SUVS, 13.5%, according to Edmunds data. For 2019 model years that are still on dealer lots, full-size trucks have an average discount of 17%; mid-size SUVs, 14.4%; and subcompact SUVs, 16.3%.
For instance, Nissan is offering up to $6,250 off the Murano for certain trims, as well as 0% financing for up to 36 months and deferred payments, Cars.com research shows. GMC is offering cash discounts on certain Terrain and Acadia models as well as 0% financing for up to 84 months. Chevrolet is also offering 0% financing for that same length, including on its Silverado 1500.
Last month, 0% financing deals accounted for 25.8% of purchases financed, compared with 4.7% in March and 3.6% in February, according to Edmunds.
And some loans stretch for five, six or even seven years. While those longer loan deals are reserved for consumers with good credit, they also may put buyers in a tricky situation down the road if they end up wanting to sell or trade in the car and owe more than it’s worth — i.e., having so-called negative equity.
“Getting into a long loan might feel justifiable when it’s a shiny new car, but six or seven years from now, you’ll be making the same payment on a car that’s not shiny anymore,” Mays said. “The negative equity situation is something to be cognizant of, but for those who qualify for 0% deals, they’ll see significant savings.”
Also, make sure you compare dealerships. While they all generally give you the manufacturer’s discount, one may give you a better deal on a trade-in, a lower interest rate on your loan or some other perk.
Even once you find the best deal, Mays said, there’s another number that you should focus on: the “out-the-door” price.
“That amount includes all taxes and fees, and you should negotiate that number,” he said.
www.cnbc.com 2020-05-22 14:58:44