Dealers Can't Wait Until Your Loan Ends
Car dealers are now looking at new ways to get customers back in the showroom, according to Automotive News, several years earlier than the customer might have planned.
With 60 month, or longer, loans, customers don't see dealers often enough, so dealers say. Dealers know that many customers often begin to get the itch at around 36,000 miles when the manufacturer's warranty runs out and maintenance costs start to increase. However, in most cases, the customer is upside down on his loan.
The concept is one in which dealer salespeople are trained to contact mid-term customers and explain to them that being upside down is not a bad thing, and that it's possible to get into a brand new vehicle if they trade now.
Here's the potential catch. The new vehicle deal is a lease, which means that even after the negative equity from the old loan is rolled in, the payments won't seem so bad.
There is nothing inherently wrong with this concept or with leasing, assuming 1) the negative equity is not so large as to require a large down payment to help pay it off, 2) the customer is qualifed to lease (drives no more than 15K miles per year and understands how leasing works), and is willing to stick out the lease until the end. If, after the first lease, the customer decides to lease again, payments will likely go down dramatically because there is no negative equity being rolled in the second time around.
To understand leasing, see LeaseGuide.com.
With 60 month, or longer, loans, customers don't see dealers often enough, so dealers say. Dealers know that many customers often begin to get the itch at around 36,000 miles when the manufacturer's warranty runs out and maintenance costs start to increase. However, in most cases, the customer is upside down on his loan.
The concept is one in which dealer salespeople are trained to contact mid-term customers and explain to them that being upside down is not a bad thing, and that it's possible to get into a brand new vehicle if they trade now.
Here's the potential catch. The new vehicle deal is a lease, which means that even after the negative equity from the old loan is rolled in, the payments won't seem so bad.
There is nothing inherently wrong with this concept or with leasing, assuming 1) the negative equity is not so large as to require a large down payment to help pay it off, 2) the customer is qualifed to lease (drives no more than 15K miles per year and understands how leasing works), and is willing to stick out the lease until the end. If, after the first lease, the customer decides to lease again, payments will likely go down dramatically because there is no negative equity being rolled in the second time around.
To understand leasing, see LeaseGuide.com.
posted by Al Hearn at 5:45 PM
<< Home