Vermont Automobile Dealers Are Finding That 0% Interest Rates Work Like a Charm

Vermont Automobile Dealers Are Finding That 0% Interest Rates Work Like a Charm

The much-advertised "zero percent financing" promotions sponsored by American automobile companies have worked out just fine, according to auto dealers in the White River Valley.

"October was a record month," said Gary Wood at Valley Motor Sales in Bethel, the GM dealership. "I have never seen anything like it before."

"It’s the busiest fall that we’ve ever had," said Jack Green at Ted Green Ford in Stockbridge. "It’s hard to keep up with the paperwork."

"It’s been very good," said Herb Crawford Jr. of the Chrysler dealership in South Royalton. "I’m a little overwhelmed with the (customer) traffic and the interest in vehicles."

All three auto dealers gave much of the credit to the zero-interest financing, which was first supposed to last through October but now has been extended, in some cases into January.

"The prices are low right now, and with those interest rates, the savings are in the thousands of dollars," Crawford said. People evidently came to the lot determined to buy, he said, citing a "closure rate" of 60%-70%, compared to the more normal 30% to 40%.

Green too is certain that the low-interest financing gave his firm "sales that we wouldn’t have gotten." What will happen when those deals come to an end is somewhat worrisome, he admitted.

"We’ve been borrowing on future business," he said.

In Valley Motors, Wood agrees that the low interest rates have helped, but he thinks other factors are important, too.

"The market is just on fire," he said, noting that non-American auto manufactures have seen tremendous business, too, even though they haven’t offered the zero-percent loans.

Referencing a Wall Street Journal article from last week, Wood guessed that "pent up desire to buy" was part of the phenomenon.

Also, he suggested, the events of Sept. 11 just made some people want to buy cars.

For some there might have been the feeling that "life is short, so do it now," while for some, auto transportation might suddenly seem more advantageous than air travel. Whatever it was, Valley Motors sold 270% of its target.

Customers were going for top-of-the-line vehicles, he said., walking past small and mid-sized sedans to buy big SUVs and pickups. "I sold three Suburbans in a week," he exclaimed, noting that he usually doesn’t sell many more than that in a year.

"Customers want every bell and whistle imaginable."

Green and Crawford also said that high-end vehicles were selling well. Green cited "record sales" on Ford’s popular F-series trucks, as well as Explorers and Windstars.

Though the low interest rates undoubtedly attracted buyers, many did not actually finance with the zero-percent option, the dealers said. Most companies limited the zero-percent option to 36-month payback times, meaning the monthly payments were still hefty—especially when buying $30,000 vehicles.

Many customers opted for the 48- or 60-month plans, which carried interest rates of 2%-5%, which is still a low rate.

Nationwide, the year 2000 was a record year in the auto industry, and the local dealers said sales during the last three months of this year will push 2001 to nearly an equal level.