KBB: Car Prices Likely to Rise Through Yearend
The average vehicle last month cost $32,184 ― up 1.2% from September ― and transaction prices will likely rise through year-end, said Kelley Blue Book Senior Analyst Alec Gutierrez.
“We’re seeing the highest vehicle transaction prices that we’ve ever seen in the auto industry,” Gutierrez told Auto Finance News. “As consumers are trying to cope with these higher prices, lenders are having to extend the loans out further and further.”
Gutierrez attributed the higher transaction averages to a rebound in truck and SUV sales; stricter fuel-economy requirements; and stronger safety standards, which require new investment in technologies.
“Consumers are demanding more in an automobile, and that, in general, has driven prices up,” he said.
But higher prices have led more consumers to leasing. Current lease penetration is just north of 24%, which is above the historical norm, Gutierrez said.
My comment was that if the high rates are justified – prove it. If you can prove it, then the banker will get “Trustworthy points” and thanks for the community service. Now if the people with bad credit and no credit do not have the ability to pay for the loan when the loan is made, why is it being made? Or why is it being made for so much?
If you cannot prove it, then the banker is abusing the public – again!
While I have not asked the current auto finance bankers to prove it on this topic, I did recently in the past on credit card rates and fees. They could not prove it, were judged abusive by the public, and had the Credit Card Act shoved down their throats.
Does “high risk lending” or is it “stupid lending” that includes extended term financing so that the buyer has no equity until year #5 and usually has no equity in his trade-in on the next car. Which one is it that allows the sale of “independent warranty insurance” that fails to deliver and is overpriced? Which one is it that finances the dealer no value add-ons? Etc, etc.
Have you ever been in the coffee room at an auto dealership and listened to the boastful chatter of a salesman that was discussing how they “laid away” that car buyer? I have. “Laid away” is the polite words for their actual verbage that also means “Abused” which was the topic of this chat.
Shame on the bank that let them get away with it. When I ran the auto finance division at a major bank, I would not allow that to be part of the financing package. And I was very successful in volume goals, losses, and profitability.