77.5 Million Americans Plan on Car Shopping This Labor Day Weekend
In America, it seems certain holidays become associated with different shopping events — the largest example being the day after (or, in recent years, day of) Thanksgiving sales known as Black Friday. With summer nearing its end one such retail holiday is just around the corner, as Labor Day has become partially synonymous with car buying blowouts. In fact, ahead of the holiday weekend, the personal finance site WalletHub has released a new survey asking consumers about their car shopping plans and how the economy at large could be impacting them.
According to WalletHub’s study, approximately 77.5 million Americans intend on shopping for a car over the Labor Day holiday weekend. What’s more consumer confidence seems to be on the rise with a majority of respondents saying they felt more financially secure purchasing a car this year than last. Additionally nearly half (48%) said it was currently a car buyer’s market.
As you might expect, when it comes to factors influencing a consumer’s to decision to buy, the vehicle’s monthly car payment and price were the two most important factors (coming in at 28% and 24% respectively). On that front WalletHub found that interest rates for new cars are at one of their lowest points in the past three years. Unfortunately the same cannot be said for used car loans, which have APRs 14% higher than new car loans on average. Plus used car loan rates for prime borrowers have increased by 43% since 2016. Finally WalletHub found that loan rates from car manufacturers came in 34% below the average, with credit unions offering loans at 12% below average, while regional banks and national banks were found to have loan rates 14% higher than the average. Getting an online loan is another option with sites like Supermoney making it easy to compare rates.
This year’s sales event comes at the time when the United States is locked in a trade war with China and other countries. Perhaps that’s why 56% of those surveyed said they’d prefer to buy an America-made vehicle over an import. Similarly more than one-third said they’d need to receive at least $5,000 in savings to consider purchasing a foreign car over a domestically-made one.
Speaking of trade and the economy, there is a big question as to whether the Federal Reserve will continue to cut interest rates, potentially saving car buyers money later this year. However, when faced with this question, WalletHub CEO Odysseas Papadimitriou noted, “Car shoppers may benefit from lower rates in the wake of future Fed rate cuts, but they could also be hurt by an escalation in the trade war. So waiting could wind up costing you money. He went on to suggest, “Since no one can predict the future, the best approach is not to try to game the market. Rather, do your homework on finding a vehicle that is a good value and will fit in your budget. From a personal finance standpoint, it’s always best to focus on minimizing debt and getting all the miles you can out of your current car.”
Ultimately, while vehicle cost and loan interest rates are important to consider, consumers shouldn’t forget about the other costs that come with owning a car. From potentially increased insurance premiums to vehicle registration fees, would-be car buyers should carefully consider their budget before being lured by Labor Day sales.