Car Boom Causes Strange Demand and Financing Effects reports ABW Autorevo
Used car leases for what is essentially more than new models
Severson drove his Accord to the dealership two day slater to receive his $5,200. The dealer “gave me a fair price and it was handled within a few days," said the 31-year-old Uniontown, Ohio, resident.
That instance is simply one of a growing rippling trend throughout the rebounding U.S. Auto market.
"I am spending more time now trying to buy cars than sell them," said Mr. Waikem, who has seven new-car franchises in Northeast Ohio. He parks delivery vans that advertise his purchases at high school sports events and uses a computer program which alerts him whenever local used-car postings appear on Craigslist.
The shortage on used cars has stemmed from the sharp plunge in new-car sales that occurred between 2008 and 2010. The virtual total loss of new-car leases during the crisis has also helped create the demand for used cars in reverse. The result seen is three-year-old cars are now harder to find than older models which hold their value longer.
Another factor is that in order to keep factories moving, Detroit U.S. Automakers leased tens of thousands of new cars to rental car fleets, then moving them to lots as used models a handful of months later.
There are now fewer of those vehicles due to manufacturers cutting excess production since 2008. Cash-for-clunkers also took a toll on the number of older vehicles that are on the road and available to interested parties.
The scarcity of cars has brought car prices up, pushing them to the point wherein consumers who finance a purchase can get new vehicles for nearly the same monthly payment.
A 2013 Corolla LE sells for $18,000, while a 2010 model costs $14,200. Yet the monthly payments are almost identical at around $300 per month respectively. The difference being that the new-car buyer gets a 1.9% for 60 month rather, whilst the used-car buyer pays nearly three times that amount for a lesser vehicle.
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