The effects of the coronavirus pandemic continue to spread throughout the world, creating disruptions in the economy, sending the stock market on a roller coaster ride, shaking consumer confidence, and putting thousands out of work. With the growing turmoil, can you buy a car, and should you? If you need a car, what’s the safest way to buy one? Should I change or cancel my auto insurance, since I’m not driving to work?
In this story, we’ll look at how the coronavirus and the COVID-19 illness it spawns are affecting the automotive market, and what you should do if you’re in the market for a car. There’s quite a lot we don’t currently know, and we’ll update this guide as more information becomes available.
According to the U.S. Centers for Disease Control and Prevention (CDC), “Different parts of the country are seeing different levels of COVID-19 activity. The United States nationally is in the initiation phase of the pandemic. States in which community spread is occurring are in the acceleration phase.”
On Friday, March 13, President Trump declared a state of emergency, unleashing federal resources to help deal with the crisis. State and local officials have ordered schools closed and have implemented stringent restrictions to limit crowds, promote social distancing, and keep people in their homes. According to the Johns Hopkins University Center for Systems Science and Engineering, by Monday, March 30, U.S. cases exceeded 143,000, with about 2,500 fatalities attributed to the disease. The disease has reached all 50 states, three U.S. territories, and the District of Columbia.
Carmakers are rolling out programs to entice sales and support buyers who may have trouble making their car payments. With increasing calls for social distancing and shelter-in-place orders, dealers are facing increasing restrictions about when and if they can keep their doors open. Events are unfolding at a rapid pace, as automakers announce plant closures to protect their employees and respond to slackening demand.
If you’re a car owner with a loan you’re unsure you can pay back, jump over to our story about auto loan relief during the coronavirus crisis. There, you’ll learn what you should do now and see special programs automakers are making available to help their customers.
U.S. News & World Report has put together a guide to what you need to know about the disease. The chance of contracting the disease is small, but the number of those currently affected is growing dramatically. Taking measures to prevent the spread can protect you, vulnerable family members, and others in the community.
Is Now a Good Time to Buy a Car?
The fear of the coronavirus should not stop you from buying a car – as long as you're looking for a vehicle that meets your needs and that you can afford. However, you don’t want to risk the health of you, your family, or others in the community to puchase a vehicle. You want to follow the advice of medical authorities about person-to-person interactions, hand washing, social distancing and other methods of preventing disease spread.
The question is quickly becoming “can you buy a car?” As states and cities adopt stricter policies to prevent the spread of the virus, dealerships in many cities and counties are having to close their doors or limit their hours due to shelter-in-place or stay-at-home orders. Between March 20 and 22, the list of jurisdictions with orders limiting the movement of people grew by the hour. The list of jurisdictions with shelter-in-place and stay-at-home orders continues to grow by the hour.
U.S. News & World Report has assembled a guide to state-by-state responses to the virus.
In some cases, dealers are allowed to keep their service operations going, but closing the sales side of the dealership. The National Automobile Dealers Association (NADA) and other dealer organizations have been lobbying to have the sales side of dealers declared essential businesses. In some areas they have been specifically declared non-essential, while in others (such as Oregon) they are exempted from closure orders.
Why Would Now Be a Good Time to Wait?
If you work in an industry that is susceptible to a coronavirus-induced downturn that could lead to layoffs or reduced hours, you should carefully consider whether it’s a good idea to lock yourself into a car loan or lease. The industries that will be affected by the pandemic are no longer limited to the travel and hospitality sectors. It will likely affect supply and demand in nearly every corner of the economy. Waiting for a few months to see if things settle down might save you from getting into a loan or lease, then missing payments or defaulting due to a job loss.
With dealerships forced to close in many areas by either government order or slackening demand, the opportunity for customers to comparison shop between multiple dealerships becomes more difficult. Though demand is low, your options may be limited to just a dealer or two who are able to keep the doors open.
If you are immunocompromised or in a high-risk category, the risks involved from entering public spaces should outweigh your desire to visit a dealer and get a car.
Most car deals are announced at the beginning of each month, so by about April 1 we’ll have a good idea of what automakers are offering to boost sales and leasing. Several automakers, including Ford, Fiat Chrysler Automobiles (FCA), and General Motors, have already rolled out long-term zero percent financing offers. Many automakers are offering payment deferral programs, so you won’t have to start paying for your car until several months after you’ve taken delivery.
Is Now a Good Time to Lease a Car?
There’s no simple answer whether now is a good time to lease a car. Yes, there will likely be some great lease deals announced in the coming days, as automakers and their dealers do whatever they can to bolster sales.
However, a lease is a contract between you and the leasing company that is difficult to sever if you lose your job and can’t make your payments. Unless your job is on rock-solid footing, you should not lease a car until the economy is back on track. With a car purchase, you can sell the vehicle if you need to satisfy the loan. The same is not true of a car lease.
We discuss more about the coronavirus and car leasing later in this story.
Is Now a Good Time to Buy a Used Car?
Now is a good time to buy a used car, but the weeks ahead will likely be better. The effects of lower demand for both new and used cars will be reflected with sellers willing to accept significantly less than they could have demanded before the virus began to dominate the news.
There are many good reasons to buy a used car rather than a new car right now. At the top of the list is price. Used cars are much cheaper than new cars, and their lower prices lead to smaller, more affordable loans and less chance you’ll be underwater on your financing.
We’ll talk more about how to buy a used car a bit later in this story.
How the Coronavirus is Impacting Car Deals
While some car deals are already being rolled out in response to reduced demand, it’s too early to predict whether savings on new and used cars will be widespread, or if there will be shortages caused by plant closures. It will likely be a mixed bag, with excellent deals on some models and shortages of others. It won’t just depend on where the car is produced — it will also depend on the sources of all of its parts.
Though we won’t know about the virus’s direct effect on sales until they’re reported at the end of the month, there are many anecdotal reports from across the country about declining showroom traffic. In many areas, dealerships are closed by order of states and other jurisdictions.
In the increasing likelihood that the COVID-19 pandemic keeps customers out of showrooms, automakers and dealers will have to offer incentives and lower prices to entice buyers and lessees. Some, including Ford, General Motors and Fiat Chrysler Automobiles, have already done so. Taking advantage of a car deal can save you thousands of dollars off the cost of the car or dramatically reduce the amount of interest you have to pay on your car loan.
Hyundai, and its luxury arm Genesis, have brought back their job-loss protection program, which will cover as many as six payments for buyers who lose their job. Several automakers are offering financing programs with the first payment deferred for up to 120 days.
The newly announced offer from Ford includes three months of payments funded by Ford, and up to an additional three months of deferred payments. You won’t have to start making car payments until you’re seven months into your Ford-financed loan.
The fundamentals of smart car buying remain the same. You want to cast a wide net by seeking prices from multiple dealerships, negotiate the car’s price, avoid budget-busting extras, and take advantage of purchase and lease incentives offered by automakers. You can find the best low-interest financing and cash-back deals on our new car deals page. Our lease deals page shows offers from carmakers with low monthly payments and small amounts due at signing. If you’re in the market for a certified pre-owned car, our used car deals page can show you the financing offers available.
The U.S. News Best Price Program connects buyers and lease customers with local dealers offering prenegotiated pricing. Car buyers save an average of more than $3,000 when they use the program.
The Coronavirus and Car Loan Interest Rates
The U.S. Federal Reserve has made unprecedented moves this month to reduce a key benchmark interest rate to near zero and support the economy. The strategies are intended to encourage lending, boost consumer spending, and help the economy stabilize. The measures should lower the interest rate you pay on a car loan, though consumer interest rates are not tied directly to the rate the Fed reduced.
“The actions from the Fed ahead of its scheduled meeting on Wednesday reflect the view that a recession is a virtual inevitability,” says Curt Long, the chief economist at the National Association of Federally Insured Credit Unions. “As the Fed has stated previously, it believes it is better to meet such a scenario early and with force, rather than by gradually opening the faucets.”
Our Money team assembled a guide to what the Federal Reserve’s interest rate cut means to consumers.
The best way to get a low interest rate is by comparison-shopping at several lenders and getting preapproved for a car loan before you head to the dealership. Different lenders will lower their interest rates at different times, so it’s a good idea to take a broad look at the financing marketplace. It's never a good idea to start shopping at dealers without a preapproved loan in hand. They won't have any incentive to give you a good deal on financing if they don't have an offer to beat.
Will the Coronavirus Cause a Shortage of Cars to Buy or Lease?
It is increasingly likely that supply chain disruptions and plant closures will lead to a shortage of some vehicles sold in America. Those shortages will likely be offset by plunging demand, as consumers stay out of showrooms.
Early in the outbreak, factories and suppliers in Asia suffered disruptions. Automakers across Europe, including Fiat Chrysler Automobiles (FCA), Volkswagen, BMW, Ford, Renault, and others have announced plant closures. Plants in Japan and Korea have seen significant disruptions in components arriving from China. Korean automaker Hyundai previously shut down factories in Ulsan, Korea, in response to the virus.
Auto Plant Closures Across America
The U.S. auto industry has nearly ground to a halt. Ford and General Motors have announced plans to suspend production at all North American plants through March 30. Fiat Chrysler Automobiles announced similar closures through the end of March. Many of those initial closures have now been extended until at least April 14.
“GM and the UAW have always put the health and safety of the people entering GM plants first, and we have agreed to a systematic, orderly suspension of production to aid in fighting COVID-19/coronavirus,” said GM Chairman and CEO Mary Barra.
Honda announced a six-day closure of their plants in the U.S., Canada, and Mexico, with plans to reopen on March 31. Toyota declared a two-day shutdown of their North American manufacturing facilities, later extending the suspension of production to 10 days. Nissan’s U.S. plants will be shuttered from March 20 until April 6. One of the few North American car-making plants still in operation — BMW’s Spartanburg, South Carolina operation — is set to close on March 29 and reopen on April 13.
In Indiana, Subaru has suspended manufacturing operations from March 23 to April 7, according to Automotive News. Hyundai’s Alabama plant closed on March 18. A restart date has not been announced.
“UAW members, their families and our communities will benefit from today’s announcement with the certainty that we are doing all that we can to protect our health and safety during this pandemic," said United Auto Workers President Rory Gamble, via Twitter.
After several days of back and forth with county health officials, Tesla has announced a plant closure. The automaker suspended manufacturing operations at their Fremont, Calif. plant at the end of the day on Monday, March 23.
There was one bright note on March 24, as Volvo’s Polestar division began production of the battery-electric Polestar 2 in China. The vehicle will come to North America following its European and Chinese market debuts.
According to the Ann Arbor, Mich.-based Center for Automotive Research “Every week the industry is idle is costly. The Center for Automotive Research (CAR) estimates that just a one-week shutdown would result in an estimated annual loss of 94,400 total U.S. jobs, $7.3 billion in overall earnings and $2 billion in lower government tax receipts from personal income taxes, contributions for social insurance programs and current transfer payments.”
In the U.S., General Motors, Tesla, and their suppliers are looking at ways they could support the production of essential medical equipment. Ford announced a partnership with General Electric and 3M to produce ventilators, respirators, and face shields. The company is exploring a plan to use the fans from F-150 seats as a component in the respirators they build. In Europe, Fiat and Ferrari are working with a medical equipment manufacturer to develop ways of producing parts or assembling medical equipment. General Motors is partnering with medical manufacturer Ventec to make respirators under the Defense Production Act. Its Warren, Michigan plant will shift to making surgical masks.
Supply Chain Issues
The automotive industry operates with a global supply chain. A car might be assembled in the U.S., but its parts are likely to come from around the world. Those regions include areas that are affected by high rates of COVID-19 cases. It only takes a shortage of one critical part to cause an assembly line to slow to a halt. The industry’s decades-long shift to “just-in-time” manufacturing means factories no longer stockpile components. Instead, many parts head to the assembly line the moment they arrive at the factory’s door. It is possible to shift global supply chains, though it takes significant amounts of time and money to do so.
Factories in the U.S. are not immune to disruptions in overseas parts manufacturing. According to a story in Automotive News, the Toledo, Ohio-built 2020 Jeep Wrangler uses steering gears manufactured at a facility in the region of China’s coronavirus outbreak.
Parts production in the Wuhan, China region is starting to recover from a near halt several weeks ago. However, the virus is spreading to more countries around the world that are contributors to automotive supply chains.
Will the Coronavirus Cause a Delay in the Delivery of New Models?
Yes, the COVID-19 pandemic will affect both production launches and debuts of many new models. The Bowling Green, Kentucky plant that builds the new mid-engine 2020 Chevrolet Corvette was sidelined soon after cars began rolling off the assembly line. Ford cancelled the media debut of the new Bronco, and dozens of media drives of new and redesigned models have been canceled.
It’s not just production facilities that are affected by the outbreak. Design, engineering, testing, and even marketing interruptions can delay a car’s arrival in the marketplace. Vehicles such as the Ford Mustang Mach-E, which have debuted, still require significant work before making it to production and eventual sale.
Several automakers are converting facilities to produce vital medical supplies. Once the services of those plants are no longer needed, it will take time to shift them back to vehicle and vehicle component manufacturing.
With the plunge in fuel prices and thousands of Americans out of work, the idea of spending more to get an electric vehicle or hybrid won’t be compelling for most consumers. During a year where electric and electrified car sales were expected to accelerate, they will likely tumble, along with the rest of the auto market.
Auto Show Debuts
Most new car models and significant redesigns are announced at one of the major U.S. auto shows, such as Los Angeles, Detroit, New York, or Chicago. The New York Auto Show has been rescheduled for the fall, while the North American International Auto Show in Detroit has been canceled for 2020. The venue the show uses in downtown Detroit is being converted to a temporary COVID-19 hospital.
Some automakers have converted their glitzy in-person vehicle debuts into webcasts. Hyundai recently introduced the 2021 Hyundai Elantra live on the internet. Its luxury arm, Genesis, introduced its 2021 G80 flagship sedan via live stream on Sunday, March 29.
Automakers had dozens of debuts on tap for the originally scheduled New York and Detroit shows. You can expect many of those vehicles to be unveiled in non-traditional events over the coming months.
Should I Be Concerned About Buying Cars Made in China or Korea?
Currently, few cars are built in China for the U.S. market. The one relatively high volume model made there is the 2020 Buick Envision. Buick dealers have a deep supply of the two-row luxury compact SUV right now. They are currently offering generous incentives to help their pace of sales.
Korean automakers Kia and Hyundai build a number of their cars in Korea. However, many of their models, including some of their most popular SUVs, are manufactured in America, where factories are also closed. Only time will tell if shortages of their Korean-built models occur. The 2020 Jeep Renegade and 2020 Fiat 500X are produced in Italy, one of the countries hardest hit by the virus.
Can the Coronavirus Survive the Trip from Asia on a New Car?
According to the CDC, the spread of respiratory droplets from affected people to others is thought to be the primary means of COVID-19 transmission. While they believe you can also get the virus from touching a surface that has been contaminated, it is not suspected of being the virus's primary means of transmission.
“In general, because of poor survivability of these coronaviruses on surfaces, there is likely very low risk of spread from products or packaging that are shipped over a period of days or weeks at ambient temperatures,” says the CDC. There is currently conflicting information from medical authorities about the time the virus can remain viable on different surfaces.
Weeks or months pass between the time a car leaves its factory in Asia or Europe and when it arrives in an American dealership. It is extremely unlikely the disease would survive the journey, according to experts.
What Steps Should I Take to Protect Myself When Shopping for a Car?
There are many ways to protect yourself from the coronavirus when car shopping. Here are a few:
Do Your Research Online
With all of the resources available on the internet, there’s little that still has to be done in-person at the dealership or lender. You can comparison shop for financing and fill out loan applications online. In some cases, you can sign the loan documents electronically and have them transfer the funds directly to the dealership.
You can also do much of your car shopping online. A good place to start is with our new car rankings and reviews and used car rankings and reviews. Our rankings are based on the consensus opinion of the top automotive journalists in the U.S., blended with quantifiable information about safety, predicted reliability, and several other factors. Our reviews are designed to answer the questions shoppers tell us are critical to their leasing and buying decisions.
Once you have an idea about the car you want, you can start contacting the internet sales department of dealerships. You can see their inventory online and negotiate the price of a vehicle by email or phone. If you agree on a deal, they can have the paperwork ready so you can minimize – or even eliminate – your time in the showroom.
In short, the more of the car-buying process that can happen outside of the dealership, the better.
Explore Home Delivery Options
One way to avoid going out into the community is to take advantage of a dealership’s home delivery option. Not all dealerships will deliver directly to your home, but it’s a good idea to ask if it’s possible. Though not all dealers participate, many Chevrolet, Buick, GMC, and Cadillac dealers will deliver cars to your home or office through GM’s “Shop. Click. Drive.” program.
Ford has announced that more than 75% of their dealers are now able to deliver vehicles to your door.
TrueCar (a U.S. News partner for our Best Price Program) now shows a badge on their site identifying dealerships that offer remote paperwork processing, deliver vehicles to buyers’ homes, and have a verified vehicle sanitation program.
“Starting today, consumers will be able to easily identify dealers offering these ‘Buy from Home’ features within the TrueCar experience,” said Mike Darrow, TrueCar’s president & CEO.
Used car retailers CarMax, Vroom, and Carvana offer home delivery programs for preowned vehicles. You can complete all of the purchase and financing paperwork online, and the companies will deliver the vehicle to a place of your choice. Carvana is offering “contactless delivery,” where the representative will stay in the vehicle as you sign your paperwork.
Tesla has announced a “touchless delivery” program, where customers can access their newly delivered vehicles using the Tesla app on their smartphones. They can then sign the paperwork left in the car, and drop the documents off before they leave.
Automotive subscription startup Fair is now offering a contactless delivery option at your home. The company provides used cars for as long as you need with an upfront payment and a monthly subscription fee. Unlike a lease, you can terminate the subscription at any time. It’s a viable option for workers who still need to get to work, but don’t want to risk exposure to the virus on public transit.
In a growing number of regions, shelter-in-place orders are already in force or are being considered. In those locations, home delivery may be your only option. However, with auto retailing declared a non-essential business in some areas, even home delivery may violate shelter-in-place or stay-at-home orders.
Ask the Dealership What Precautions They Are Taking
It’s fair to ask dealerships what they are doing to protect their customers from the virus. If you’re not satisfied with their response, you can take your business to a dealer with a more acceptable answer.
An employee of a Toyota dealership in Kirkland, Wash. recently tested positive for the virus. The store closed for deep cleaning and disinfecting, according to Automotive News. Many dealers are reaching out directly to customers by email, describing the steps they are taking to clean their facilities and protect both customers and employees.
“The safety and security of our customers, team members and dealers is a top priority,” according to a Toyota spokesperson. “Our 1,500 Toyota and Lexus dealerships across the U.S. are taking extra steps to ensure the safety and security of our customers and their employees.”
Disinfect the Touch Points of Any Car You Test Drive
A thorough test drive of any car you’re considering is a critical part of any purchase. However, you don’t know how many people have had their hands on that door handle or steering wheel before you. It’s best to treat it like any other public space and insist that it is disinfected before you drive.
It’s important to wipe the car down yourself, or watch a dealership representative do it, as you don’t know how thorough dealership personnel may have been when preparing the vehicle. Be especially careful with keys and key fobs, ensuring they, too, have been disinfected. Before wiping any fabrics or other soft-touch surfaces, test the disinfectant in an inconspicuous place to make sure you won’t damage the material.
Different sellers may have different standards when it comes to the cleaning of used cars. If you’re looking at a private-party used car, you should assume that nothing has been done to disinfect the interior. While some dealers may disinfect the interior of a used car as part of their refurbishment process, many just clean the interior and shampoo the carpets.
Some retailers, including used car seller CarMax, are offering test drives with no salesperson in the car. If that’s not an option, consider putting off your purchase or driving with all of the windows down to get a constant flow of fresh air.
Wash Your Hands and Don’t Touch Your Face
Just as with any other public location, you should follow the CDC's COVID-19 prevention guidelines when visiting the dealer and following your test drive. That means washing or disinfecting your hands, avoiding touching your face, staying far away from people who are ill, employing social distancing, and covering your sneezes and coughs.
Don’t Shake on the Deal
It’s a normal part of a price negotiation to shake hands when you’ve reached a deal. Right now, you should probably avoid that tradition, or wash your hands as soon as you can if you do shake hands. In fact, it’s also a good idea to take your own pen to sign the sales documents.
The Coronavirus and Used Cars
Many of the same car-buying tips you should follow when buying a new car also apply to used cars. Our guide to buying a used car covers the basics, but we’ll discuss other things you should do below.
What Should I Know About Coronavirus Transmission Before Climbing Into a Used Car?
According to the CDC, the virus is spread via respiratory droplets formed when an infected person sneezes or coughs. They can be directly transferred between people standing less than about 6 feet apart or from touching surfaces covered by the droplets.
According to the National Institutes of Health (NIH), the virus can survive on surfaces for longer than originally thought. The updated thinking is the virus can last for hours or days, depending on the surface. The materials used on the interior of cars – including plastics – are thought to support the virus for longer than on some other materials.
That’s why it is critical to ensure everything you touch in a used or new car has been disinfected.
Should You Insist That Used Car Cabin Filters be Changed Because of the Coronavirus?
While a vehicle’s cabin air filter should be inspected as part of a used car purchase and replaced occasionally, replacing it does little to protect you from the coronavirus. The viruses are much smaller than the particles vehicle HEPA filters are designed to capture. Even if some cells are trapped, they’re not killed by the filter.
Your time is better spent wiping down the places in car interiors that are frequently touched, such as steering wheels, door handles, turn signal stalks, and radio controls.
How to Shop Safely for Used Cars from Dealers
Like with new cars, much of your used car shopping can be done from home. Once you’ve decided what you want and have found one at a local dealership, ask for the car’s vehicle identification number (VIN). With the VIN, you can get a vehicle history report from a company such as Carfax or Autocheck. The information in the report will tell you if you should pursue the car or keep looking. Many dealers will provide vehicle history reports to potential buyers, so you don’t have to purchase one yourself.
In theory, a car dealer should disinfect their used cars just as well as they do their new inventory. However, you shouldn’t take any chances, and insist on seeing them wipe down the car or doing it yourself. If you’re not satisfied with the way they’re prepping the car for your inspection and test drive, it’s not worth risking your health by getting in the car. Simply find another dealer.
Many dealers are now offering to let buyers test drive vehicles without a salesperson in the car. If that’s an option, you should do so. If it’s not, reconsider your purchase or look for ways to create maximum social distancing and drive with the windows open.
A crucial part of any used car purchase is an inspection by an independent mechanic. If your city has mobile inspection services, now is a great time to use them. If not, see if the dealer will take the car to your mechanic or if your mechanic will visit the dealer. If either is hungry enough for business, they may help you out.
Try to get as much of the transaction paperwork done online as possible. Use your own pen to sign, and insist that the desk you’re using is wiped down before you start signing papers. Even though you want to minimize your time at the dealership, you should not rush your visit by failing to read each and every paper you sign. You want to make sure the papers you sign reflect the deal you agreed to, are complete, are accurate, and don’t include any costly extras.
How to Shop Safely for Used Cars From Private Sellers
When you buy from a private seller, you have no way of knowing how well the car has been cleaned before you arrive, or how many other potential buyers have been in it. You should be prepared to wipe down the touch points of the car yourself. If the seller resists, move along to another used car.
Issues you may currently have if you opt to buy a car from a private-party seller include completing the sales and registration paperwork or making payment. In some states, the departments of motor vehicles are either closed or operating with reduced staff. In general, you want to make payment at your bank, but many bank branches are currently closed, operating at reduced hours, or conducting business by appointment only.
The Coronavirus and Car Leases
Leasing a car can be complicated in the best of times. It’s even more complex right now, as shelter-in-place orders may limit your ability to return a car at lease-end and lease or purchase a new vehicle.
What to Do if Your Car Lease is Expiring During the Coronavirus Pandemic?
If your lease is nearing its end, you want to contact your leasing company to discuss your options. In some areas, dealers are closed by shelter-in-place and stay-at-home orders, making it difficult, if not impossible, to return your car when the lease ends. Those same directives can make it difficult to comparison shop among local dealers for a new car to replace your current lease.
Different automakers are offering varying strategies to deal with lease returns during the pandemic. Some are accepting returns through their service departments, which are considered essential and are remaining open in most areas. Others will come to your house to pick up the car. Most are offering lease extensions.
If you’re stuck at home during the pandemic, you can use the time to research your next car, look for lease deals, and start contacting dealers to find the best offer. A growing number of dealerships can deliver cars right to your home.
Can You Extend Your Car Lease as a Result of the Coronavirus?
Several automakers are offering lease extensions to get customers through the worst of the pandemic. Maserati, for example, will extend leases for as long as six months. If you opt for an extension, it’s critical you discuss whether your mileage cap will be increased or whether you’ll be subject to the original limit. Through this due diligence, you can manage your driving and avoid excess mileage fees.
General Motors will automatically extend your lease for one month if you do not return your vehicle within 10 days of your original termination date. The extension does not add any miles to your mileage allowance, however.
Many Leasing Companies are Deferring Payments
If you’re one of the thousands of employees who’ve suddenly found themselves with no job or drastically cut hours, the thought of making a lease payment is probably stressing you out. Fortunately, the majority of automakers, and their leasing arms, are deferring payments on current leases.
It’s essential you reach out to your leasing company before you miss a payment. Doing so will help protect your credit score, save you from a late fee, and give your leasing company an opportunity to help. It’s more difficult for them to help you when you’re already behind on your payments.
Different carmakers and leasing companies are offering varying amounts of payment relief. Don’t assume any offers you see advertised from one brand will be mirrored by your leasing company.
Is a Lease-to-buy Option a Good Idea During the Coronavirus Crisis?
Most car leases allow you to purchase the car at the end of the contract for a specific price that’s stated in the paperwork. Depending on market conditions, the stated price in the lease can be more or less than the car’s actual value at the end of the lease. If the price stated in your contract is much lower than the market price, buying your leased car is a good deal. If it’s higher, purchasing the car is more expensive than buying a similar car on the used car market.
With declining sales traffic in dealerships, and likely a slowing of private-party sales, prices for used cars are expected to decline. While the amount of used car price declines are not yet known, they may be dramatic. Before you consider buying your leased car, you’ll want to look at what similar used cars are selling for in the marketplace to see if you can buy one for less.
Is It Safe to Take My Car to a Dealer or Independent Shop for Service?
As long as you follow some precautions, it is generally safer to take your car to an auto shop for service than it is to delay important maintenance or repairs. Of course, treat the facility as you would any other public space and follow the CDC's guidelines to help prevent the spread of the disease.
Auto shops and dealer service facilities have been allowed to stay open under many jurisdiction’s shelter-in-place rules. Officials consider them an essential service. Before you go to the shop, be sure to call ahead. Many are operating with limited hours, reduced staff, and are only performing certain repairs.
Before you leave the facility, wipe down the door handles, steering wheel, and other touch points with a sanitizing wipe.
Some consumers may be tempted to skip the repair shop altogether and do their own auto repairs. While most consumers can do basic maintenance, new cars are far more complicated than vehicles of the past. Any repairs that involve safety systems are best left to trained professionals.
How Large of an Impact Will the Coronavirus Have on the Car Industry?
Automotive research firm ALG (a division of U.S. News partner TrueCar) initially forecast 16.9 million vehicles would be sold in the U.S. this year. They’ve just revised their new car sales estimate to reflect market disruptions resulting from the COVID-19 pandemic. Their “optimistic” forecast now pegs the market at 15.3 million units, and the “mixed” forecast predicts 13.2 million vehicles will be sold. Their most pessimistic “cautious” forecast shows only 11.2 million new vehicles sold.
“With the temporary closure of dealerships across the nation, continued declines in the stock market and ongoing uncertainty around the short/mid-term strategy to battle COVID-19, ALG expects further declines in our annual automotive sales forecast,” said Eric Lyman, Chief Industry Analyst for ALG. “While events continue to unfold daily, it seems the most likely outcome is vehicle sales landing in the mid 13 million range for 2020.”
“Online shopping and digital retailing will play a critical role in mitigating the drop in vehicle sales,” Lyman added. “Automakers are already rolling out innovative incentive products to stimulate consumer demand but the industry must iterate on existing sales practices and become more accommodating to shoppers in a ‘stay at home’ environment.”
The analysts at ALG believe the industry will bounce back over time, with many of the sales lost this year occuring at a later time, as vehicle owners need to replace aging cars.
The Coronavirus and Gas Prices
Gas prices are plummeting across the country. The drop comes from both a price war between Saudi Arabia and Russia and the fact that Americans are driving less. With many working from home and reducing travel, the demand for automotive fuel has greatly decreased. According to AAA, 29 states currently have fuel prices averaging less than $2 per gallon.
Does that mean you should go out and buy a gas guzzler? Probably not. Fuel prices will likely bounce up once the coronavirus crisis ends and the summer driving season kicks off.
More Tools From U.S. News & World Report
At U.S. News & World Report, our expert journalists and researchers are devoted to assisting you with life’s most important decisions and events. Our Health team has created a guide to the COVID-19 disease, and our Travel team answers questions about coronavirus and traveling.
You can stay up to date with the latest news about the pandemic and its effects in the U.S. News & World Report coronavirus content hub.