How COVID-19 Coronavirus Is Affecting Auto Loans (And Car Dealerships)
Interested in buying a new car? Wondering if now is a good time, or curious to learn more about how the COVID-19 coronavirus outbreak is affecting auto loan rates and car dealers? Let’s take a look now.
Interest Rate Cuts Are Leading To Lower Rates For Qualified Borrowers
The Federal Reserve announced an emergency rate cut to 0-0.25% to help combat the economic damage caused by COVID-19 coronavirus. Because the cost of auto loans, mortgage rates, and even personal loan rates are affected by Federal Reserve interest rates, this has led to lower overall borrowing rates for qualified borrowers.
When the Federal Reserve raises interest rates, the cost of borrowing money goes up – and vice versa. For those looking to get a new car, now may be the right time to buy a vehicle, especially because car manufacturers are offering deep discounts and other incentives to keep sales up during the outbreak.
Low-Interest Rates Mean Refinancing Is A Great Option For Many Borrowers
Today’s low-interest rates also mean that, if you currently have an auto loan, you may be able to refinance it with another lender for a better rate. If you have a secure source of income, this may be a great time to refinance your vehicle and save money on interest, particularly if your credit score has improved since the loan was originally issued.
Car Sales Are Sinking At An Unprecedented Rate Due To COVID-19 Coronavirus
Compared to March 2019, auto sales in March 2020 are expected to decline by 35.5%, and overall auto sales for 2020 are expected to be at least 15% lower than they were in 2019.
To combat this, many companies are offering special deals for customers who purchase vehicles during this time of economic uncertainty. Ford is offering a delay of 90 days until customers make their first payment, and General Motors is offering 0% interest and 120-day deferred payments to some customers.
Some Dealerships Are Temporarily Shutting Down, But Most Remain Open
Many states in America have issued “shelter-in-place” orders that involve shutting down “non-essential” businesses. However, the Department of Homeland Security has included “vehicle service and parts businesses,” on its list of “essential infrastructure” that is exempt from closure orders.
Mostly, car dealerships are still open and offering sales and service, but recommendations in some states like California have led to dealership shutdowns, and some independent dealers are shutting down temporarily due to poor sales.
Dealerships that are still open are implementing steps to minimize contact between staff and shoppers, maintain social distancing, and sanitize their facilities to minimize the spread of COVID-19.
Be Aware Of COVID-19 Coronavirus And Its Effects On Auto Loans & Car Dealerships
So stay safe, do the best you can to stay updated about COVID-19, and know how it may affect your future financial decisions and your life.
Hopefully, this guide has helped you learn more about auto loans and the state of car dealerships during the COVID-19 coronavirus outbreak. While the future is uncertain, it seems likely that this virus will have some major effects on lenders, car dealerships, and automakers alike.
Car Loan Rates and COVID-19 FAQs
This is determined by each lender. However, most lenders are offering a payment deferral program. The deferral period is different for each lender – it can be anywhere from 30 days to 90 days loan deferment. This applies to loans and leases.
Your most important priority is to stay safe during the COVID-19 crisis, which means avoiding public places as much as possible. That said, if you are in the market to buy a new or used car…it’s actually the perfect time. Auto loan interest rates have dropped and concerned car dealerships have lost up to 80% revenue. Which means you can get a great deal.
Average car loan interest rates are around 6%, but depends on several factors. And because interest rates vary week-to-week it can be difficult to nail down what current interest rates are or will be by next week. Your best bet is to shop around to find the best rates.