This is in response to one of our readers, Meagan, who asked (in reference to this article): “With gasoline prices going down, do you think car sales will soon go up?”
Sure, if people have the money to spend on cars in general.
Say gas drops to less than $2 a gallon. That’d be nice, but it really won’t make much difference if there’s wide-spread unemployment as well as depression of overall wages.
If you’re lucky to have a $10 an hour job, you won’t even be in a position to buy a new, $35K minivan or SUV.
If you were in that financial position 6 months ago, you might have been able to find a bank to lend you money to get a $35K minivan or SUV, but six months from now? Probably not.
If you’re just scraping by, and you’re going to have to start buying your cars outright, rather than getting them on credit, your options will narrow.
Buying cars will be done in much more of an old school way: Buyers will have to save up cash, and buy a car outright.
If you’re talking about a 5 - 10 thousand dollar purchase, that’ll be a lot more doable for people in that economic environment than a 35 thousand dollar purchase.
In other words, get used to dealing with used car salesmen and mechanics.
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