CARY, N.C. –
Results of a July survey orchestrated by LendingTree found the depth consumers are putting off vehicle repairs because of tightened household budgets stemming from the coronavirus pandemic, including some figures of individuals who could be buy-here, pay-here dealership customers.
The findings reiterated why GWC Warranty offers dealerships tools to help market and promote the potential value of a vehicle service contract.
LendingTree discovered consumers of color currently are disproportionately dealing with debt due to vehicle trouble. The online marketplace found Black American (59%), Hispanic American (52%) and Asian American (47%) vehicle owners have been in auto repair debt at higher rates than white Americans (38%).
All told, LendingTree determined about 28% of Americans would not be able to cover a $500 vehicle repair without taking on debt. The company learned through the survey that’s especially true for Black Americans (39%), those who were laid off due to the COVID-19 pandemic (34%) and women (32%).
Meanwhile, nearly six in 10 survey participants (58%) have skipped a necessary vehicle repair because they couldn’t afford it, including 71% of millennials.
Furthermore, LendingTree discovered about one in six (16%) consumers would not be able to get to work if their vehicle broke down. That number spikes to 30% for those individuals earning less than $25,000 per year, according to the survey.
Finally, LendingTree said people whose income was affected by the pandemic are struggling with debt from vehicle trouble. About a third (35% of those who were furloughed and 30% of those whose salary or hours were cut) have been in debt for that reason since March, versus 11% whose income was not impacted.
“While it’s ideal to pay for car repairs in cash, not all consumers have that kind of money stowed away in an emergency fund,” LendingTree said in a news release.
Enter firms such as GWC Warranty, which offers F&I products like vehicle service contracts. GWC Warranty has promotional material that can be downloaded here that show potential costs of major vehicle repairs that often can be covered by a VSC.
“It’s exciting when your customer gets behind the wheel for the first time, and the last thing they want to think about is what may happen a few years down the road — or even just on the way home. But the reality is that as soon as buyers drive off the lot, there’s no telling what’s around the corner,” GWC Warranty said in a recent company blog post.
“Aside from the routine maintenance and wear and tear they may already be factoring into the cost of ownership like oil changes and the occasional flat tire, unexpected costs like a major engine repair, air conditioning replacement, and labor that goes along with it can really add up,” the company continued.
“Be prepared to educate your customers during the buying process so they’re aware of what the cost of ownership can add up to beyond a monthly payment,” GWC Warranty went on to say.