New Car/Truck Shoppers Seek Alternative to Rising Financing Costs
The 21.3% of consumers who plan to freshen up their driveway with a new car this year, according to AudienceSCAN, may experience sticker shock if they're heading to the dealership for the first time in a few years, according to the car-shopping experts at Edmunds. Thanks to a combination of rising interest rates, longer loan terms and higher average transaction prices, Edmunds experts say, on average, a buyer could pay $6,500 more to purchase a new vehicle than they did five years ago.
During the first quarter of 2018, interest rates on new-vehicle loans grew sharply each month, culminating in an annual percentage rate (APR) average of 5.7% in March 2018, compared to 4.4% in March of 2013. On top of that, the average amount financed reached $31,020 compared to $26,533 in 2013 and loan terms have stretched to 69.5 months compared to 65.7 months five years ago.
These added costs are amplified for car buyers with subprime credit. According to Edmunds experts, subprime car shoppers could easily face twice the average APR on a new-vehicle loan. For example, a subprime buyer who had to pay 11.4% in interest would have finance charges of $11,501 over the life of a 69.5‑month loan, an increase of $6,027 over the average interest rate.
On the bright side, Audience SCAN data shows that 56.2% of New Car/Truck Shoppers are willing to pay more for higher quality products. Automotive dealers may be able to overcome price objections by emphasizing the quality of specific models.
Edmunds recommends that consumers with good credit consider leasing since they'll pay less every month since the total lease amount is a fraction of a new car's sale price, or find a car that has a low-APR offer.
Regardless of whether the new car or truck is bought or leased, 54.6% of New Car/Truck Shoppers make a point to buy from businesses with helpful and friendly salespeople and 74.6% of them reported taking action after seeing a TV ad in the past year. So, local dealerships should advertise their quality service because these shoppers are also 26% more likely than all adults to share a good experience on social media. Those recommendations could lead to even more business since 63.9% of New Car/Truck Shoppers took action within the past 12 months after seeing ads on social networks.
AudienceSCAN data is available for your applications and dashboards through the SalesFuel API. Media companies and agencies can access AudienceSCAN data through the AudienceSCAN Reports in AdMall.