Auto Industry Lowers Prices During Hard Times

Posted by Frank

November 30, 2008

While the automakers are on captiol hill begging for a bailout, consumers are made to belive that automobile prices are at an all time low. Some reports have cited cars are now selling at a 20-30% discount and 0% financing is making a comeback. Does this mean it’s time to buy?

In my opinion, the 20-30% discount is very tempting, but still doesn’t sway me to purhcase a new automobile. As we have said before, right when you drive a new car off the lot, it loses value, which puts your note on your car worth more than the car itself. Pherhaps, if you are lucky enough to find a 20-30% discount, this will counteract the drive off loss.

Keep in mind, if you find a dealership offering a 0% financing, they will many times consider this the discount and the car itself will still be priced high. Of course, this is all assuming your credit is good enough for such offers. If you are lucky enough to come into a deal with cash, you should see the sticker price fall.

In general, you will probably see a new car’s price drop around $3-4k with these advertised discounts and you will have a very hard time finding a new car under $10k. Considering all the variables, I still believe the value is in used cars. Yes, new cars have reduced a little in price, but they should, they are incredibly overvalued. Used cars will too likely see reductions in price if new cars continue to drop. I would much rather purchase a used car with approximately 70k miles for, depending on the car, $3k-7k. This type of car will give you a mode of transportation (remember, this is really all cars are) for around 10 years or more. This same type of car brand new will likely cost you $10-14k in addition to interest payments on a loan. $