To say the auto industry has been shaken by the COVID-19 pandemic would be an understatement. With nearly every automaker being forced to shut down factories and many dealerships closing their showrooms, falling sales are an expected casualty. Although much remains uncertain for the foreseeable future, some car purchases just can't wait. If you're in the market for a car, you're probably wondering if there are some good deals out there or if there is a shortage of inventory due to the factory closures. Here's what the automotive landscape looks like as it relates to auto deals, interest rates, and inventory.
New Car Deals
With so many obstacles in the way, automakers and dealers are motivating shoppers to buy with special measures like vehicle delivery, solo test drives, and financing incentives. Although it may be possible to snag a good deal on your auto loan rate, it is unrealistic to expect a steep discount on the price of a vehicle during the pandemic.
According to The Drive, despite the overall drop in car purchases, dealerships that are still open for sales actually experience a higher demand because so many other showrooms have closed their doors. This means your dealership may not be willing to negotiate as much as you think.
The good news for car shoppers is that many automakers are offering special financing and deferment options to keep their vehicles moving. For example, GM is currently offering interest-free financing for 84 months on options from Buick, GMC, Chevrolet, and Cadillac. Subaru is offering interest-free loans for 63 months on the Legacy, Outback, Impreza, Forester, and Ascent, or 0.9% for 48 months for the Crosstrek, WRX, and BRZ. Other automakers like Ford, Toyota, and Honda are offering shoppers the option to defer up to three months of payments. To protect customers, many dealerships are offering remote vehicle delivery.
Auto Loan Interest Rates
The federal interest rate was dropped to a range of 0-0.25 percent earlier this month in an emergency move to help encourage lending and stabilize the economy amid the Coronavirus. How will this affect your car loan rates?
According to Bankrate, you will likely see car loan interest rates fall because they are influenced by the federal interest rate. However, they are not directly tied. Shopping around for financing is still the proven way to find the best offer so you should avoid rushing the purchase. If you're not certain about your financial future, it's best to wait to take on a car loan and avoid the dangers of falling behind on your car payment.
Interest rate offers will also largely depend on a car buyer's credit score and many of the automaker incentives are reserved for shoppers with excellent credit. Shoppers with compromised credit should shop around and get pre-approved for their auto loans to find the best possible interest rate and terms.
Inventory Shortages and Dealership Closures
Perhaps a more important question than "can I get a deal on a car?" amid the COVID-19 crisis is "can I actually buy a car?". With automakers like Ford, GM, FCA, Honda, and Nissan shutting down their factories and switching their focus to Coronavirus relief efforts, a shortage of vehicles is a cause for concern. However, this week some automakers presented an optimistic plan to restart factory operations by early to mid-April which would mitigate the risk for shortages.
Another question is whether a dealership can accommodate shoppers for test drives and car purchases during the COVID-19 crisis. While service departments and repair shops have been classified as essential business, the sales departments at many dealerships have closed or are operating under special conditions. Some are accepting car shoppers by appointment only, so If you're looking to buy a car in the coming weeks, call ahead to set up an appointment for a test drive.