Coronavirus may give you an opportunity to buy a cheaper car

This content is sponsored by PenFed Credit Union.

After seeing auto sales plummet recently, automakers are starting to report higher sales as states continue to reopen from the coronavirus pandemic.

While the market is showing signs of rebounding, automakers are still trying to move cars off the lots, and that means incentives and sales for consumers like you.

“Dealers have not been fully open for quite some time since we’ve been in this COVID-19 world,” said Ivan McBride, Vice President of Auto Lending Products and Sales at PenFed Credit Union, during the discussion Smart Auto Shopping and Financing. “Since about mid-March or so when a lot of the states went on the stay at home orders, dealership sales operations had not been fully operational. Some have been selling vehicles through their service departments since service departments were pretty much across the country considered essential operations.”

However, the inventory is still high, especially for last year’s cars.

McBride said if you’re in the market for a 2019 car, dealers are sitting on inventory and may be willing to cut a favorable deal.

“Dealers have been paying wholesale charges on those vehicles when they floorplan a vehicle or bring a vehicle on. They finance that vehicle as well and they’re paying these wholesale charges on a monthly basis,” McBride said. “Any vehicles that have been on their lot for any significant amount of time that they haven’t been able to move, they will look to put some discounted pricing on.”

The price points might be a little different than expected though. Even though dealers are willing to discount cars, automobile prices have been on an upward trajectory. The average price point for a car now is between $30,000 and $35,000.

“That’s because there’s a lot of new technology on vehicles,” McBride said. “There’s a lot of new safety features. Vehicles for all manufacturers are pretty much loaded now with a lot of great equipment. So, we’re seeing average transaction prices go up in the U.S. We still love our trucks, and we love our SUVs and we love the big trucks and the bigger SUVs and the manufacturers follow suit. They build what consumers want. Gas prices are pretty low at the moment.”

What’s the best way to afford those cars though?

One option is to take out a longer term loan. Some financing options are available at 72 or 84 months if you’re trying to stretch your budget farther.

“With longer terms you have the ability to keep your monthly payments low without sacrificing the vehicle features you want.” McBride said. “There are a lot of great options out there as vehicles become more and more expensive. I think that’s really a good opportunity for you to do your homework with regard to what are the finding financing options that are available.”

Financing also might come with some perks too. McBride said that PenFed offered a campaign that offered a $250 savings deposit for bringing a vehicle financed at another institution to PenFed.

“We had overwhelming response with a tremendous amount of consumers out there,” McBride said. “They’re looking for opportunities to lower their car payment. We couldn’t be any more happier with the success that we’re seeing on the refinance front. We’re going to continue having programs throughout the summer to help members lower their loan rates and monthly payments through refinancing.”

McBride said right now might be a smart time to buy a car considering how people are trying to isolate more.

“There’s a lot of data out there that supports that folks are really concerned about what’s it going to look like next time I rent to rent a car or I when I go to the airport and start traveling again? Do I want to jump into that Lyft or that Uber?” McBride said. “I’ve heard anecdotal feedback from folks who just don’t want to ride either the subway or the metro or hop onto a bus who maybe looking for opportunities to purchase.”

The COVID-19 conditions may force families to reconsider the way they vacation this year. Since flying is still taboo, many families may be taking long car rides or even short jaunts on small weekend trips instead of a bigger vacation.

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