This is the year for people to buy cars. There is an increase in demand for personal vehicles, and this trend is expected to persist throughout the year. People have become wary of taking public modes of transportation. Having personal vehicles will allow them to feel safe and secure.
The imminent rollout of a vaccine promises a return to some form of normalcy sooner rather than later. This also entails more people going out to carry out their daily operations like work, school, groceries, and the like. Expect the post-pandemic world to be filled with personal vehicles to give people some peace of mind when leaving their homes.
The Road to Recovery
Automakers and car dealerships around the country suffered from a deep sales decline in the previous year. Companies were forced to shut their factories down for a couple of months, and the pandemic prevented consumers from visiting dealerships.
As a result, the industry is estimated to have sold 14.5 million cars and light trucks in 2020. These figures amount to a 15% decline from 2019. It’s also the lowest level of sales since 2012, which was the year the auto industry was recovering from the financial crisis.
Staying on Track
If the vaccine rollout successfully stabilizes the nation, leaders and experts are optimistic that the industry will bounce back stronger than ever. New vehicle sales are expected to range from 15.6 million to 16 million vehicles. This will provide an increase of somewhere between 7.6% to 10.3% compared to the previous year.
Ultimately, this is more than a decent improvement for the auto industry. There’s already strong demand, which will only persist as the year progresses. On the side of consumers looking to purchase personal vehicles, there’s also some good news to be heard.
Fueling the Demand
Funding the purchase of a new car can often be the biggest hindrance for consumers. Paying a lump sum of cash for a vehicle is simply not achievable, especially as the threat of mass unemployment lingers. The next best course-of-action is to get an auto loan to break down the cost into monthly payments that are more affordable.
Experts are predicting low-interest rates despite the rising prices of new vehicles. For anybody intending to buy or lease a vehicle, this is a favorable setup. Generally, auto loans can be considered good if they have an interest rate of less than 5%. A five-year vehicle loan is expected to drop to 4.08%, with four-year financing averaging 4.75% in the coming months.
Of course, the interest rates also depend on the creditworthiness of an individual. The lowest interest rates are simply reserved for those with a spotless financial picture. However, people who have a credit history filled with late payments or delinquencies shouldn’t have to worry since there are bad-credit dealerships that cater to customers having trouble securing a loan.
If these predictions hold true, it will make the five-year auto loan the cheapest it has been since early 2015 with four-year rates being the lowest since 2014. On average, a typical new vehicle now costs around $39,000. With the rate cuts, a consumer can expect to pay $627 monthly on a five-year loan and $779 for a four-year term.
Getting longer loans can lead to lower payments. However, getting an auto loan term of more than 60 months or five years is ill-advised. Vehicles can depreciate quickly, which could leave consumers owing more than their car is worth. An increase in term length for auto loans, like 72-month terms, can also lead to more auto loan delinquencies.
Plan the Route
Aside from new vehicles, there’s also an increasing market for used cars. These markets will usually cost less, which can be appealing to consumers. Regardless, an individual should do their own research before securing an auto loan.
In some cases, dealerships can also offer some form of financing. It’s important to note that car dealerships are allowed to mark up their interest rates on their auto loans. This can lead to higher rates simply because it includes a cut for the dealership.
Before deciding to buy a vehicle, new or used, consider comparing the rates among local lenders first and then head to the showroom to see what a dealership has to offer. There are also instances when an automaker might have special financing or leasing options for an individual’s vehicle of choice. These could be beneficial for the consumer.
The Finish Line
At the end of the day, there’s no better time to get a personal car. There’s a substantial increase in demand, leading automakers to make more sales. Interest rates are at their lowest, which plays in favor of buyers or lessees. It’s a win-win situation for both the auto industry and its consumers. Do not let this moment pass.