new cars more expensive because of cheap financing?

[Kntx]

The thread from a couple days ago discussing the whether it is better to finance or pay cash for a car got me thinking. Are the prices of new cars artificially high due to the cheap financing available? Certain brand new cars can be had with financing as low as 0%. I can’t turn on the TV or listen to the radio without hearing the latest financing deals (usually between 0 and 3%). It follows that the loss the manufacturers take on the financing is made up for in the purchase price of the car. Therefore anyone paying cash is subsidizing the cheap financing. How much of the value of the car lost when you “drive off the lot” can be attributed to the financing? I’m more convinced than ever that a 2-3 year old off lease car is the way to go.

 

[SearchMaster]

Many (most?) cars have either rebates OR low finance rates. At least the few I've looked at recently.

 

[ElFenix]

mark 'em up to mark 'em down is an old sales strategy.

 

[JeffreyLebowski]

They're more expensive because the auto industry keeps getting mandated to improve safety, improve milage, improve quality. All of those things come with a price.

 

[fbrdphreak]

They're more expensive because the auto industry keeps getting mandated to improve safety, improve milage, improve quality. All of those things come with a price.

+1 There is no "Geo Metro" anymore. The closest thing to it will have TPMS, 8 airbags, AC, stability control and an automatic transmission all standard in 2011.

Not to mention this little thing called inflation.

 

[StageLeft]

Many (most?) cars have either rebates OR low finance rates. At least the few I've looked at recently.

Though not always the case, this is generally the case, at least based on what I see on TV ads.

 

[vi edit]

If you want "inflated" look at used car prices. Now that's an absurd market.

It's *CHEAPER* to buy new than a year or two old.

 

[StageLeft]

If you want "inflated" look at used car prices. Now that's an absurd market.

It's *CHEAPER* to buy new than a year or two old.

They can be overpriced but there are still sweet spots. The deal we got on our one year old MPV was still epic to my standard and with its factory CPO warranty it was honestly hard to lose.