It appears the recent economic downturn and spate of fuel price rises has not only changed the types of cars we buy, but also the way we pay for them. The latest study by independent vehicle pricing and information authority Kelley Blue Book has revealed that new car buyers are almost twice as likely to pay for their new purchase with cash as they were just three years ago.
The results are based on the findings of 338 in-market car shoppers surveyed last month on Kelley Blue Book’s website (kbb.com) and show that 74 percent of respondents plan to buy a car within the next six months; 67 percent of them opting for a used car and the remaining 33 percent planning to buy new.
Of these, 42 percent of used car shoppers and 20 percent of new car shoppers said they plan to pay cash for their next vehicle instead of going with a loan. Just three years ago, only 11 percent of new car buyers wanted to pay cash (there is no data for used car buyers).
"In-market car shoppers are taking a decidedly conservative approach to car buying right now, which we think can be directly attributed to low consumer confidence in the current economy," explained Kelley Blue Book market analyst James Bell. "It seems people are re-assessing their financial situations and deciding to spend less, buy used and pay more often with cash. Incentives have loosened their tight grip on the American consumer, with more people deciding to purchase what they can truly afford versus what they can get with over-extended credit lines and incentive offers on the hood from manufacturers."
Other interesting tidbits revealed through the survey include the finding that half of new car buyers are looking to spend a maximum of $25,000 or less, while 62 percent of used car shoppers only want to spend $15,000 or less.
The survey also revealed that 0 percent financing remains the most popular loan incentive and that half of the buyers opting for a loan plan to do so through a bank or credit union.
[Kelley Blue Book]