Your personal information and the highest auto loan interest rates in eight years.
Buying a new car puts your finances and life in danger, several recent studies say.
Hackers are able to steal your personal data, and even cut your brakes through internet technology in new cars, according to insurance company Esurance.
In this round up, we go over new trends in car buying. From more Americans choosing to lease over buying, to the increase of online shopping before heading to the dealership.
Vehicle data mining?
Yeah, that’s a thing.
All the bells and whistles in new vehicles are feeding car makers plenty of our personal data. And most people Esurance interviewed for their study were completely unaware.
Why should they be? It’s not like the dealerships flat out tell buyers, their new vehicle is capable of mining data while they drive. There is currently no law forcing them to.
“Any time we put information in the cloud, there’s a risk of it being hacked,” the study says. “Until we pass laws in the U.S. that govern how this information can be used, it’s unclear to consumers what car companies are doing with their data.”
There has been talk of making a law, and a bill has even been written by two senators last year called the SPY Car Act.
Senators Edward J. Markey (D-Mass.) and Richard Blumenthal (D-Conn) feel it necessary to protect U.S. consumers’ privacy while driving. Unfortunately for recent car buyers, that bill hasn’t picked up any momentum yet, according to Esurance.
“Whether in their cars on the road or in aircraft in the sky, Americans should be protected from cyberattack and violations of their privacy,” Markey says. “If hackers access the critical systems of a car or plane, disaster could ensue and our public safety could be compromised.”
What’s interesting is how much we’re willing to pay to drive these vehicles — even when we can’t afford to own one.
Those who can’t buy, lease
The annual percentage rates (APR) on new vehicle loans is at a record high, according to car-shopping website Edmunds.com.
The average APR on a new financed car hit 5.2 percent this February. In 2013, that was number was only 4.4 percent. And with the increase in APR, the average new car price and monthly payment have also risen.
- 2018: APR is 5.2 percent, amount financed is $527, and monthly payment is $31,313
- 2017: APR was 4.9 percent, amount financed was $515, and monthly payment was $30,753
- 2013: APR was 4.4 percent, amount financed was $462, and monthly payment was $26,700
These increases may be reason for near-record high numbers of consumers leasing over buying, Edmunds says.
“Car shoppers tend to have tunnel vision when it comes to their monthly payments,” says Edmunds executive Jessica Caldwell. “As average transaction prices and interest rates rise, we’re likely going to see more consumers explore the option of leasing.”
Caldwell thinks more consumers may see leasing as an easier alternative to affording a new car.
“In some cases this is a result of consumers simply seeking a way to cut down monthly payments,” Caldwell says. “But for many others, this the only option available when they discover that they can no longer afford the costs of a new vehicle.”
Where do most these car buyers start the shopping process? Online.
Tech car buying
Most car shoppers (80 percent) start looking online before heading to the dealership. However, 78 percent still value the in-store experience to finish up the transaction, says a study from CDK Global, a provider and manager of dealer websites.
“Shoppers told us they are interested in more online tools, but they don’t want to buy cars online just because they can,” says a CDK Global vice president Max Steckler. “There has to be more value, and the connection between online and in-store is critical to providing value for dealers and shoppers alike.”
Seventy percent of millennials use a dealership website when searching for a car, the study says. While the average car shopper spends almost nine hours researching online. Still, 43 percent spend at least three hours at the dealership when buying a car.
Millennials also use online car shopping tools to better understand their credit risk situation more than baby boomers, says a study from credit bureau Equifax.
Seventy percent of millennials with a credit score between 680-739 know their credit situation before entering the dealership. The same goes for 64 percent of millennials with a score under 640. However, 78 percent of baby boomers with a higher score are aware versus only 53 percent with a lower credit score.
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Article last modified on April 30, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: What You Really Pay For a New Car - AMP.