The coronavirus pandemic has disrupted nearly every aspect of daily life, including the purchase of major ticket items, such as new vehicles. The immediate effects of the pandemic were devastating for new car sales, which fell by 45% in April 2020 when compared to the same month in 2019. If one of your goals for 2021 is to find yourself behind the wheel of a new car, however, you may be in luck. The experience of buying a new vehicle just might be a little different than you’re used to. The auto industry has done its best to adjust to market conditions by taking steps to minimize risks at its showrooms, ramping up online options for researching and purchasing new vehicles, and offering deals designed to entice customers during uncertain economic times.
How to buy a car during the pandemic
The COVID-19 pandemic is dramatically reshaping how dealerships sell vehicles
Vehicle sales on the rebound
Even as dealerships see sales figures rise, low interest rates are still available to buyers.
Looking for deals
Given the initial plunge in car sales of more than 30% due to the virus, you might expect to find plenty of deals available. However, car companies halted production early on, so supply was reduced along with demand. The result? Prices haven’t changed all that much. There are some exceptions, however. Car manufacturers have advertised discounts of more than $5,000 on some trim models of popular vehicles.
When it comes to financing, however, many automakers are offering options designed to reassure and attract reluctant buyers. Chief among those enticements are payment deferments and no-interest and low-interest loans. Depending on the manufacturer and dealer, you may still be able to find no-interest options on select 2020 models if your credit score is high enough, or you may be able to qualify for loan deferral of up to 120 days. That means you wouldn’t start making payments until a few months after your purchase. Some dealerships have also offered additional discounts for first responders and health care professionals.
Even if the specific vehicle you’re looking at doesn’t have special offers, low interest rates may make this a good time to buy, whether you’re looking for a new or used car. Interest rates for 60-month new car loans have been around 4.25%, and 36-month used-car interest rates have been around 4.6%.1 Remember that the interest rate you qualify for may depend on your credit score.
As special offers change often, it’s a good idea to research before you begin your buying process to know what may be available to you. Be sure to understand whether the financing deal changes after a certain time period so you know what the interest impact may be in the future. Your financial advisor can help you understand how a new car payment may fit into your budget, or what accounts may be best to use for a down payment.
A new experience
What are the changes in the car-buying experience, and what do they mean for those interested in buying a car now? The new options primarily eliminate or minimize the need for in-person contact, but they can vary by dealership and location. For instance, while remote signing of contracts has been introduced in many places, there are some localities that require in-person signatures. You will need to check with the individual dealerships you are considering doing business with to see what those businesses can offer in the way of shopping and purchasing options.
Many auto dealers have introduced new programs to make it easy for customers to shop for and purchase a vehicle remotely. While specifics vary between dealerships, you may be able to request a vehicle be delivered to your house for a test drive, undergo a real-time credit check, negotiate online and select your financing. After you have made all of your selections—including trim, accessories and a service plan—and ordered your new vehicle, the dealership will prep it and bring it to your house.
If you find you must go into the dealership for any phase of the sales transaction—such as a test drive, the signing process or simply to pick up your new vehicle—check beforehand to make sure they are adhering to CDC recommendations. Proactive dealerships are taking multiple coronavirus precautions, including having employees wear masks and undergo daily temperature tests. You’ll also likely find hand-sanitizing stations available throughout the dealership, where retailers are regularly cleaning surfaces, sanitizing vehicles and locking them between customer viewings. Don’t expect a handshake to close your purchase, and desks and seats will be spread apart to allow for social distancing. You may even see acrylic shields.
Beyond traditional dealerships, there are also numerous other types of car retailers that have been able to get a foothold in the market during the pandemic. Carvana, for example, which buys and sells used cars, offers touchless pickup and delivery, and the experience is handled almost entirely online.
While the coronavirus pandemic has jump-started many trends in the auto industry, there is every reason to think that many of them will continue even after the public health crisis abates. Millennials, who will soon make up the bulk of the car-buying public, are very comfortable making online purchases, and most car buyers are likely to appreciate the time-saving and stress-reducing nature of online vehicle purchases.
Despite all of the innovations, just remember that the fundamentals of car buying haven’t changed: Seek prices from several dealerships, negotiate the car’s out-the-door price, avoid expensive extras, and take advantage of any brand or dealer incentives.