There’s almost an $11,000 gap between the costs of new and used auto loans, meaning consumers can save more than $10,000 simply by choosing a used vehicle over a new one. So if you’re looking for new leads for auto loans, focusing on used car buyers might be a savvy strategy for 2017.
This huge gap is the largest on record, as told by Melinda Zabritski, Experian’s senior director of automotive finance. According to her, this monumental difference is mainly because of new vehicles and the amount that must be spent on them.
Monthly payments for loans continue to climb. The standard monthly loan payment for a car is now around $506, which is $13 more than the same time last year. Side-by-side, the monthly payment for a loan on a used care only climbed somewhere around $5, totaling out to roughly $364. Interest rates for car loans have gone up from 4.13 to 4.25 in just two years.
Because of both the rise in price of auto loans and vehicle costs, themselves, the length of auto loans is increasing as well. This, evidently, leads to around 2.44 passing the 30-day delinquent on repayment of their loans. This is a slight increase from 2015.
What This Means for Auto Dealers
After looking at these statistics, one might wonder how this effects auto dealers around the world. While some auto dealers have no uncertainty that they will continue to sell new vehicles, the numbers show that looking into used car leads may be the better option. It’s clear when looking at the information that automotive lenders have a better chance at both customer volume and money earned if they focus on used cars, as opposed to the far more expensive new car sales.
This also points to new leads for auto loans. It’s no surprise that many people will not want to shell out a lot of money for a loan they couldn’t possibly pay back, so they will try and find the best deal. After some initial research, they will eventually come to the conclusion that getting new car loan leads just isn’t viable.
To summarize, used car leads are the way to go in order to get the best return on investment for your business. And when looking into new leads for auto loans, it’s best to consider skipping the brand new truck or car, as customers will ultimately favor a cheaper, used car instead.
