2024-04-29 04:00:00
Despite a 20% drop in prices in recent weeks, people interested in buying a used vehicle are still facing difficult decisions due to the high rate of financing and their debt ratio.
This is the case of Catherine Patry who has been looking for a vehicle since her accident at the beginning of April. With an insurance check in her pocket for her shopping trip, she wanted to avoid paying an extra amount in the next transaction.
After several searches on specialized sites and social networks, she had to choose between two vehicles that met her criteria. However, for one of the two more luxurious items, she had to fork out $10,000 out of pocket. In the end, she decided to stick to her budget because of interest rates.
“I saw a rate of 8.8% and for me, it doesn’t make sense to finance a car,” explains Catherine Patry. The extra $10,000, I didn’t want to put it on a car, but on something that gives me more pleasure.”
When she was looking for an SUV with all-wheel drive, the director of an international security company realized that she had to be careful in her negotiations.
“I was interested in a vehicle on Marketplace. After checking the history of the car, it did not match what the dealer told me. I gave up. I didn’t feel like a fool.”
Less accessible funding
High interest rates for car financing and customer debt levels can put off a potential deal. Recurring case for two years.
“We are currently talking about 50% rejections and financial institutions cannot do anything,” says Dominique Durocher of Entrepôt Auto Durocher. We also see customers who have to change vehicle brands because their monthly payment is too high.”
A trend that does not surprise the insolvency trustee, Pierre Fortin.
“The monthly payment has an impact on the debt ratio which is the basis of any credit application. Since the pandemic, there have been two major impacts, the interest rate at 8-9% and the value of cars exploding.
“Before, we saw payments of $400 or $450 a month. Here, we are talking more than $700 or $800. It’s clear that far fewer people are able to qualify.”
Important adjustment
After a period where used vehicles were shown at astronomical prices, we are slowly seeing a return to normal according to the dealers we spoke to.
“Prices have fallen in recent months, but they are still much higher than those we saw before the pandemic,” says Dominique Durocher. The market changes a lot and we have to adjust our prices and inventory every week.”
“Overheating was like houses,” says Albi president Denis Leclerc. Many new people buy because there is no longer a waiting time as we saw during the pandemic.
“It brought down used prices. We have been independent for the past two years, but now the client can talk to us.
“We have to return to logical disdain. We expect to return to normality in 2025.”
Significant reduction in used vehicles
Ford ecosport 2020
2023: 24 996$
2024: 19 996$
Difference: $5000 (-21%)
Mazda CX-5 GT 2021
2023: 35 996$
2024: 29 496$
Difference: $6500 (-19%)
Nissan SV debuts 2022
2023: 27 796$
2024: 23 996$
Difference: $3800 (-14%)
Volkswagen Tiguan, 2021
2023: 32 496$
2024: 25 996$
Difference: $6500 (-21%)
2021 Tesla Standard Plus Range
2023: 45 996$
2024: 32 996$
Difference: $7000 (-28%)
Nissan Leaf SV 2020
2023: 29 896$
2024: 20 996$
Difference: $8900 (-30%)
Details provided by Entrepôt Auto Durocher
#Discouraged #interest #rate #cost #extra #car #difficult #choice #stick #budget