New vehicle sales are expected to go up by as much as 6 to 7 percent in 2012 according to Automotive News. This is largely due to a more stable economy and consumer demand that has been pent-up over several years. There are several good reasons to purchase a new vehicle in 2012. One of the best reasons is that the interest rates on car finance are currently enjoying record lows. This is expected to continue throughout 2012. The Federal Open Market Committee has restated that federal funds would be kept at a rate of between 0 and 0.25 percent. This means affordable credit for most individuals. Obtaining car finance with low interest rates is now possible for the average consumer.
The Used Car Market
Used cars have been getting high trade-in values because used car prices have remained high. This should enable many people to make substantial down payments and cut down on the cost of car finance. There is a shortage of used cars and this has meant that the average price of a 1 to 3 year old used car has gone up. The average cost of these used vehicles has gone from $15,000 in 2008 to over $23,000 in 2011. This is a substantial increase and enables a much larger down payment for a new car. Some experts are predicting that used car values will rise even further in 2012. The used car shortage is a result of depressed new vehicle sales, as well as car manufacturers cutting down on their sales to rental fleets.
Leasing prices are now at the lowest they have been in years. This is due to low interest rates and high resale values. Leasing should remain an attractive option throughout 2012 and even into 2013. By 2014, there should be a sufficient amount of lease models and trade-ins to repopulate diminished used car inventories. This larger supply of used cars in the marketplace will in turn drive down prices of used cars and bring up lease rates. This is why it is a good idea to buy a new vehicle in 2012 while the used car prices remain high due to lack of inventory.
Prices for new cars are now very competitive and should continue to be so over the coming months. Some experts are predicting a buyer’s market at some car dealerships. Japanese cars have taken a beating in the last year due to parts shortages caused by the tsunami and earthquake last spring. It is
More about Cars
likely that Japanese car manufacturers will use incentives to try to boost the market share that they lost. The Japanese manufacturers are expected to offer large rebates to lure customers back to their brands. North American car manufacturers are expected to counter this with equally attractive rebates to stop any loss of ground that was gained in the last year.
Car models on the market are now better than ever in terms of technology and fuel consumption. Car makers across the board, from Land Rover to Volkswagen, have redesigned their cars to be more consumer and planet friendly. There are an ever-growing number of vehicles that are fully or partly electrically powered. Smaller budget-minded models are now available on the market and are affordably priced for the first time car buyer. Many brands have undergone extensive redesigns to make them more comfortable for drivers and passengers. Now is the time to obtain car finance and get into the car market to make the most of the auspicious market conditions.
This article was written by Andreas, who works as a financial writer for UK based comparison site MoneySupermarket.com.