It’s the Right Time to Use Credit Cards to Buy a Car
Car Buying in a Recession
If consumers are in the need of a car, this may be the right time to use credit cards to do it. Most dealerships have huge inventories and no way to get rid of them. The recession has put auto dealers in difficult positions, since most Americans are in no hurry to invest in big-ticket items. That’s great news for consumers who are looking to make an auto purchase. Potential savings on a car are substantially greater and selections are huge. Most auto dealers are making generous deals, with cash-back options and low financing rates. Cars that once were marked up are now being marketed at well below the sticker price, and sometimes even lower than the dealer’s cost.
Scott Painter, CEO of TrueCar, said, “There’s no question that you should get a screaming deal… the slump in sales resulted in discounts so steep that new cars can sometimes be less expensive than comparable used ones.” According to research done by TrueCar, last year dealers sold approximately 21 percent of 2009 models for less that dealer price. This year, that number is up to 25 percent already.
Dealerships Feeling the Pain
Adding to the auto industry climate is the rapid closings of many dealerships. In 2008 there were 1,200 closing dealers, this year GM Corp alone is planning on closing 1,200 to 1,500 franchises. These closings have helped turn the industry upside down. For example, at one time the Range Rover was a high-quality luxury vehicle. Now, there are fleets of the vehicles available with $12,000 cash-back on purchases. This isn’t the only vehicle with this kind of savings. Cadillac’s CTS sedan comes with $7,000 in incentives, while Ford’s 2010 Transit Connect vans are already coming with a $300 cash-back special.
Credit Cards: A Near Necessity
Credit cards are almost a necessity in today’s world. Many people use credit cards for everything from everyday purchases to big-ticket necessities. Although the recession has taken its toll on the credit and lending industry, companies are trying to right their wrongs and help customers make purchases. Recently, the federal government has stepped into the credit card mess, citing unscrupulous activities and demanding changes. Credit card companies understand how bad they look in the eyes of the public due to their dodgy dealings. Some companies are cutting customer’s limits, but also bringing down interest rates to make payments more manageable. They want to have customers who continue to pay on their bills, rather than just file bankruptcy or abandon the accounts.
Because of this, credit cards are slowly being used once again to fund high-ticket items like cars. With the overwhelming discounts and deals available, this is a wise choice for some consumers. Lilah Branson of Nashville, Tennessee said, “I need a car and I wasn’t planning on buying on in the recession. But then I saw the deal my credit card company offered and the deal the dealership had…combined, the deals were too good to pass up.”
Things are Slowly Picking Up
Credit cards are helping people again, slowly integrating back into everyday use. No one knows the where economy will be once the recession is completely over, but consumers are steadily getting their feet wet and wading back toward normalcy.