Car Dealers Take Steps to Help 'Underwater' Buyers Trade Up
by: Adrienne Roberts and Christina Rogers
Dec 02, 2016
Click here to view the full article on WSJ.com
by: Adrienne Roberts and Christina Rogers
Dec 02, 2016
Click here to view the full article on WSJ.com
TOPICS: Pricing
SUMMARY: Customers who owe more than their cars are worth are getting financing incentives including rebates, long loan terms-even cash.
CLASSROOM APPLICATION: Students can evaluate the causes of underwater auto loans, the incentives that auto manufacturers and dealers offer to consumers who are underwater on current loans, and the effect of lower gasoline prices on the types of automobiles that consumers are purchasing,
QUESTIONS:
1. (Introductory) What are the causes of the increase in the number of car owners who are underwater on their auto loans?
2. (Advanced) What is the effect of a decrease in gasoline prices on the willingness of consumers to trade in the vehicles they purchased when gas prices were higher?
3. (Advanced) Why would car manufacturers and dealers set lower prices for customers who are underwater on their auto loans than for customers who are not?
1. (Introductory) What are the causes of the increase in the number of car owners who are underwater on their auto loans?
2. (Advanced) What is the effect of a decrease in gasoline prices on the willingness of consumers to trade in the vehicles they purchased when gas prices were higher?
3. (Advanced) Why would car manufacturers and dealers set lower prices for customers who are underwater on their auto loans than for customers who are not?
Reviewed By: James Dearden, Lehigh University
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