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Does this mean that rising Fed benchmark interest rates affect car dealers in a few ways? 1) The economy is in an iffy position, so customers don't want to mak
by pradn 4y ago
Does this mean that rising Fed benchmark interest rates affect car dealers in a few ways?
1) The economy is in an iffy position, so customers don't want to make big purchases.
2) Even if customers are willing to buy, car financing rates are higher so they'd be reluctant to pay a higher interest rate.
3) Cars stay longer on the lot, meaning a longer duration of interest payments.
4) The interest rates the dealer pays to the bank increase, too.
- _huayra_ 4y agoYou got it, but also add: likely dealer bankruptcies because the overhead is absolutely bonkers (and is often required by brands to set up a dealership; every brand wants a bunch of air-conditioned space to show off their new models!). This is also why you should never take your car to the dealer service center if possible. They try to rip you off so hard (and underpay their service techs) because they truly don't make that much money off each car (at least before the covid boom season, but as we see that is reverting HARD).