Not Everyone Drove Away With a Low-interest Loan in March

Steph Willems
by Steph Willems
not everyone drove away with a low interest loan in march

We told you yesterday how zero-interest financing exploded in popularity in the final two weeks of March, as governments everywhere belatedly clamped down and automakers had to pull out all the stops to lure frightened buyers out of their homes. Despite many would-be buyers not taking the bait, for some, zero-percent/84-month loans proved as irresistible as topless pics of a young starlet on the beach.

At the same time, drivers who stood no chance of netting that coveted no-interest loan were also headed to dealers.

Data provided by J.D. Power reveals that, as stay-at-home orders proliferated across the country, the buyer most likely to do just that happened to be the biggest cash cow in the industry: the cash-flush, high-credit-score 56-plus-year-old.

A reliable patron of the local dealership, the members of this cohort (who represent 38 percent of all new vehicle sales) dwindled in attendance by 67 percent in the week ending March 29th. That’s going off of sales reported from that week. All other age demographics fell, but not by as much. Sales to 18-35-year-olds fell 54 percent, while Gen-Xers stayed away to the tune of 58 percent.

Month-to-date, sales attributable to the three age demographics declined 29, 32, and 36 percent. Not surprisingly, buyers with a credit score topping 720 were more likely to stay home. Sales attributable to the 720-plus crowd (which encompasses about 65 percent of new vehicle buyers) fell 65 percent versus 52 percent for the under-720 cohort last week.

Younger people, and those with poorer credit scores, are more likely to find themselves at a point in their life where they suddenly need a car, virus be damned. Stretching the cost of a new vehicle over the longest time frame possible is appealing to those of lesser (or uncertain) means, and last month brought no shortage of uncertainty to the table. Is it any surprise that the average loan term surpassed 70 months in March?

New vehicle loan terms pass the 70 month mark for the first time ever in March. 70.6 mos was the average. 35.3% of buyers who financed a new vehicle last month had a loan term between 73-84 months! More here:

— Jessica Caldwell (@jessrcaldwell) April 1, 2020

“Vehicle purchases made in March — particularly the second half — were likely need-based,” said Jessica Caldwell, executive director of insights at Edmunds. “These shoppers might not have necessarily qualified for zero percent finance offers but still needed a car in spite of everything else going on in the world.”

While zero-percent financing ballooned in late March, the opposite end of the ladder also gained members. Loans with APRs of 10 percent or more rose from 10.7 percent of new vehicle buyers in February to 12.8 percent last month, Edmunds said.

[Image: welcomia/shutterstock]

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  • Thegamper Thegamper on Apr 02, 2020

    I would be so bummed if I bought a car in early March to have the bottom fall out 2 weeks later with all sorts of discounts and special financing.

    • See 1 previous
    • Theflyersfan Theflyersfan on Apr 02, 2020

      I was almost that guy. After me telling the last area Honda dealer where they could shove their CTR sideways due to all of the games they were playing, the MX-5 hunt began. Found a really nice Club RF and the dealer was in a mood to negotiate. I was still working on the price and financing a small part of the car when the rumbles started about everyone working from home, hours could be cut, etc. Quickly determined that this would be the wrong time, with so much uncertainty in the air. I'm fortunate to work at a company that handles medical billing, medical claims, and works with both insurance companies and hospitals. On the IT side, there should be plenty of work, even working mostly from home. But it's scary not knowing how long this might drag out and what might happen to our jobs and hours. And I am not alone in thinking this is just the wrong time to sink tens of thousands of dollars into a car, especially driving so little right now. I'm getting calls, e-mails, and texts from both Mazda dealers saying that the interest rates have gone even lower and the deals might be better. It's very tempting, and the younger foolish me would have done it, but the more financially responsible me says ride it out...we'll see who wins. Besides, I'm sure the MX-5 will be waiting for me when things get back to normal.

  • Polka King Polka King on Apr 06, 2020

    You couldn't pay me to drive a car with a hostile, malevolent facial expression. I expect pushback toward this comment by the hostile, malevolent community, about which nothing would be more obvious.

  • Denis Jeep have other cars?!?
  • Darren Mertz In 2000, after reading the glowing reviews from c/d in 1998, I decided that was the car for me (yep, it took me 2 years to make up my mind). I found a 1999 with 24k on the clock at a local Volvo dealership. I think the salesman was more impressed with it than I was. It was everything I had hoped for. Comfortable, stylish, roomy, refined, efficient, flexible, ... I can't think of more superlatives right now but there are likely more. I had that car until just last year at this time. A red light runner t-boned me and my partner who was in the passenger seat. The cops estimate the other driver hit us at about 50 mph - on a city street. My partner wasn't visibly injured (when the seat air bag went off it shoved him out of the way of the intruding car) but his hip was rather tweaked. My car, though, was gone. I cried like a baby when they towed it away. I ruminated for months trying to decide how to replace it. Luckily, we had my 1998 SAAB 9000 as a spare car to use. I decided early on that there would be no new car considered. I loathe touch screens. I'm also not a fan of climate control. Months went by. I decided to keep looking for another B5 Passat. As the author wrote, the B5.5 just looked 'over done'. October this past year I found my Cinderella slipper - an early 2001. Same silver color. Same black leather interior. Same 1.8T engine. Same 5 speed manual transmission. I was happier than a pig in sh!t. But a little sad also. I had replaced my baby. But life goes on. I drive it every day to work which takes me over some rather twisty freeway ramps. I love the light snarel as I charge up some steep hills on my way home. So, I'm a dyed-in-the-wool Passat guy.
  • Paul Mezhir As awful as the styling was on these cars, they were beautifully assembled and extremely well finished for the day. The doors closed solidly, the ride was extremely quiet and the absence of squeaks and rattles was commendable. As for styling? Everything's beautiful in it's own way.....except for the VI's proportions were just odd: the passenger compartment and wheelbase seemed to be way too short, especially compared to the VI sedan. Even the short-lived Town Coupe had much better proportions. None of the fox-body Lincolns could compare to the beautiful proportions of the Mark was the epitome of long, low, sleek and elegant. The proportions were just about perfect from every angle.
  • ToolGuy Silhouetting yourself on a ridge like that is an excellent way to get yourself shot ( Skylining)."Don't you know there's a special military operation on?"
  • ToolGuy When Farley says “like the Millennium Falcon” he means "fully updatable" and "constantly improving" -- it's right there in the Car and Driver article (and makes perfect sense).