Thousands of people refinanced their homes over the past few years, lowering their payments and saving money over the life of the mortgage. Now, a growing number of people are doing the same with their automobiles.
Motorists aren’t trading vehicles as often as they once did; instead, they’re putting hundreds of thousand of miles on them – and that has impacted dealers, lenders and repair shops.
Steve Camp showed yet another vehicle to a prospective buyer at Mike Hill Used Cars Wednesday afternoon. He’s done that many times during the twenty years he’s managed the lot. These days, it’s a different market.
“The demand is high and the supply is very low so that creates a tough environment for us to find the cars that we’re always looking for,” said Camp. New car sales are slow, and dealers are competing with independent used car dealers for inventory. Camp says keeping the lot stocked is a challenge.
“We’re having to go further to find the cars instead of relying on just local trades as we have for many years,” said Camp.
Motorists putting hundreds of thousands of miles on their vehicles means business opportunities for repair shops. “People are getting preventative maintenance… they’re trying to stay ahead of the curve,” said James Morris of James Auto Center.
Morris said vehicles brought to his shop have an average of 110,000 miles on them. “People are keeping their cars longer, they have no choice,” said Morris, “... two, three thousand dollars to fix a car or thirty thousand dollars for another car… the option is kind of clear.”
Financial institutions are capitalizing on the changing market. Tyndall Federal Credit Union, Bay County’s largest auto lender, is actively promoting refinancing.
“For years we’ve been refinancing mortgages… people have been shortening the term to get a lower rate,” said Jean Louise Hayes, TFCU Assistant Vice President of Lending. “People are realizing they can do that same thing with their vehicles now.”
Hayes said people who have had their vehicles for 24-36 months are good candidate for refinancing. “Usually they have paid down enough to get their equity in a good position and being able to shorten the term enough to be able to get a good rate,” said Hayes.
Hayes said TFCU refinanced about 300 vehicles during the 90 day promotion. One member will realize a savings of nearly $1,800 over the term of the refinanced loan. “Everybody needs a few more pennies in their pocket these days so they’re all very excited about saving some money,” said Hayes.
Repair shop owner Morris said it’s not uncommon for owners to get 400,000 miles or more out of their vehicles. “They’re fixing cars now much more and they’re paying attention to maintenance now,” said Morris.