Current automobile incentives are tempting, but in this buyers market BUYER BEWARE.
With car and truck sales lingering, automobile companies (the Big Three in particular) are getting even more desperate with their incentives to lure prospective car buyers.
Ironically, one of the main factors driving this current economic downturn (recession) was the irresponsible lending practices of the mortgage and credit card companies. Credit was extended with little regard given to whether or not the borrower could actually pay the money back. As a result people began defaulting on their loans, foreclosures spiked, home values plummet, and people began spending less on new vehicles.
Now here comes General Motors and their 72 Hour Sale with 0% financing for 72 months. Are we not fighting fire with fire here? I’m not one to get overly cynical on one particular business, but it seems like automobile companies are digging their own graves much like the mortgage lenders have been doing the last few years.
Sadly, there are no clear alternatives to free up the backlog of trucks and SUVs that are piling up on lots all over the country. The gates of easy credit will continue to be open for an already over extended consumer base until this current manufacturing cycle ends.
If you’re on the fence about the purchase of a flashy new ride and are considering long term financing, consider this. Historically, the average new car loses 60% of its value in the first 4 years of ownership. Add in the ever increasing cost of gas and the resale value of your new oversized ride may depreciate even faster.
A typical $40,000 pickup may only fetch $15,000 on the resale market in a couple of years yet the individual who financed it for 6 years (even at 0%) will still owe $25,000.
On the other hand, if your lifestyle NEEDS a heavy duty vehicle and you plan to keep it for a long time, there has never been a better time to buy new!
