In a sign of these evermore expensive times, used-car titan CarMax is now offering to pre-qualify potential customers to give them a better idea of what they can afford based on their expected finance terms.
This is probably a smart strategy on the retailer's part, cutting into wasted time and setting realistic affordability expectations, but I wonder if consumers really understand the impact of this new convenience.
If my retailer knows how much I can pay even before I start shopping, the chance that I'm going to pay less by potentially negotiating a better deal would seem to diminish substantially.
It may be an ugly quirk of my personality or the same love of conflict and resolution that guided me into my chosen profession, but I like negotiating — I always have. And if I'm honest, I carry some mix of pity and disdain for that vast majority of people who will do nearly anything to avoid negotiating, especially over vehicle purchases. It's probably why I've always loved car dealerships — and why so many of my contemporaries seem to loathe them.
The last two years of tight new- and used-vehicle inventories have been especially hard on those of us who enjoy the back-and-forth of dickering because all of the negotiating power has been with the seller.
It's why every car dealer I talk to has had the best few years of their business careers in this century's Roaring '20s and why consumers often leave feeling as though their pockets had been picked.
With average new-vehicle transaction prices now approaching $50,000 — roughly equivalent to what the median home price in the U.S. was in late 1976, unadjusted for inflation, according to the St. Louis Federal Reserve — it's little wonder consumers, sellers and lenders have started following the mortgage industry's practices.
Given the way vehicle prices are going, I just wonder how long it will be before lenders start dispatching third-party appraisers to validate the values of the purchases they're underwriting?
