Record Numbers of Car Shoppers Underwater on Trade-Ins
According to a recent Edmunds.com study, through the first three-quarters of 2016 an astounding 32% of all trade-ins toward the purchase of a new vehicle were underwater (negative equity). Edmunds, the leading car information and shopping network, reports that this is a record number. The 32% figure eclipses last year’s 30% number … and more shocking still, those upside down on their trade had an average of $4,832 negative equity at the time of their trade-in!
By trading their used vehicles in for new ones earlier in the cycle (hence, the underwater trade-in), Edmunds says customers don’t seem to mind a financial hit in order to get into a new car. They also state that people like this should consider a lease, where their payments would be lower (average of $428 per month versus $505 in a purchase) and it’ easier (and less financially painful in many circumstances) to make the switch every few years.
Underwater on Used Cars, too
Further, the underwater trend is not limited to new-car purchases. Edmunds data shows record negative equity on pre-owned car buys, too. A whopping 25% of all trade-ins toward a used-car purchase in the third quarter had negative equity – an average of $3,635 at the time of their trade.
When you remember that many customers are mostly concerned with their down payments and monthly payments – and that you have special finance opportunities available for customers such as these – their situation is not impossible to overcome. Put them in a vehicle that satisfies all their needs and wants, and they will appreciate you and return to your dealership in the future.
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