Factors driving the trend include:
* Ample Inventory
Right now, most American auto dealers have about a six-month inventory of new vehicles on their lots. That means if they stopped adding cars to their inventories tomorrow, they’d still be able to sell for six months before they ran out.
Ideally, dealers prefer to keep smaller inventories -- just a few months’ worth -- because every unsold vehicle costs them money the longer it sits on their lots. For potential buyers, this excess of inventory means more motivated dealers and a wider selection of makes and models to choose from -- even high-demand hybrids.
From zero percent financing and no-money-down deals to low interest rates on shorter-term loans, dealers are offering a plethora of incentives to woo buyers. Rebates and employee pricing have been around for a while, but last year several car companies introduced programs that promise to make at least some car payments for you if you lose your job (and income) within a certain time frame after buying one of their cars. With the arrival of warm weather – traditionally a prime car-buying season – dealers and automakers are rolling out new incentives every week.
With competition for your car-buying dollar expected to become even fiercer, your financing options may soon expand. You’ll be in an especially good position to land a deal if you know the power of your credit score prior to negotiations.
Your credit report and score give lenders a better idea of what kind of credit risk you may be. The higher your score, the more likely it is that you will be able to negotiate good finance terms for your auto loan.
If you don’t know what’s on your credit report, find out before you head out to the dealer’s lot. Web sites like FreeCreditReport.com give you instant access to your free credit report and score with enrollment in their in Triple Advantage Credit Monitoring membership.
Not only are new car dealers competing with each other, they’re competing with a booming used car market. More Americans are opting to buy used vehicles, perceiving them as cheaper to purchase. Yet new cars most often cost less to operate and maintain, so buying a new car now (when everyone else is looking for used) may actually make greater economic sense for you in the long run.
Finally you might consider buying a new car because it’s one way you can actually help the economy. Recovery from the recession is everyone’s concern and responsibility, federal officials have said. Contributing your hard-earned dollars to support a vital American industry can not only put you in a new set of wheels you’ll enjoy for years, it can give you a sense of doing your part for the economy as well.