How will the auto market play out in 2017?
Posted on Monday, December 19, 2016 at 3:59:32 PM
There has been a whole lot of hype surrounding the automotive market, especially between the end of 2016 and beginning of 2017. The technology side of vehicles in 2017 and beyond, which is both exciting and scary, continues to be a focal point, but many drivers do not want to purchase and use autonomous cars. Lending, though, has been a source of much discussion.
There is much talk about over-financed vehicles in both the prime and non-prime sectors. Extended terms and loan-to-value ratios offered by lenders are certainly adding to this injury, as consumers are so payment conscious and not always looking at the long-term picture.
The bottom line is, if you are financing retail value, plus taxes, plus warranty and GAP, I hope there is a down payment involved. Many consumers are also financing negative equity from a prior loan due to extended terms or beginning loan amount. I call it the auto bubble. Rates are low, credit is easy, and delinquency, although trending a bit higher, is still low in the grand scheme. Think housing boom but with cars.
Dealers and lenders want to keep up with competition so financing programs remain aggressive. It is up to the consumer to pull in the reins and really take a hard look at what they can afford and what is the end goal. Most often this can be solved with a bit of common sense that accurately considers your budget. Don't let the dealer or lender control your financial future - buy a vehicle with your head not your heart.
As always, happy and safe driving!