Financial challenges spur car buyer's remorse, LendingTree, Credit Karma polls find

Financial challenges spur car buyer’s remorse, LendingTree, Credit Karma polls find

Owners in $75,000-plus households struggle more with car payments than the average consumer

JOHN HUETTER  – Automotive News

Financial concerns are a key component of a vehicle buyer’s remorse, Credit Karma and LendingTree polling revealed late last year.

A November Credit Karma survey found most consumers who’d purchased a vehicle in the past six to eight months had no regrets. However, 23 percent had buyer’s remorse, with many in that group reporting that financial issues contributed to their woe.

Among those with regrets, 33 percent told Credit Karma the vehicle purchase “set me back financially,” and 26 percent said they bought the car at least in part by drawing from “an emergency savings account.” Thirty-two percent said they were “struggling to make ends meet” with their car payments, 29 percent described sacrificing necessities to cover the payments, and 21 percent said they failed to grasp the full cost of vehicle ownership. (Respondents could pick more than one answer.)

And perhaps most relevant to the F&I office’s sales pitch: Twenty-one percent said they regretted their purchase because “I didn’t shop around for the best auto loan and am unhappy with the terms of my loan.”

Credit Karma also polled consumers who were in the market for a vehicle in November. It found 41 percent of them planned to pay cash, and 55 percent of the prospective buyers were willing to spend over budget.

LendingTree in December found 39 percent of Americans had some kind of regret about a vehicle they’d purchased, while 61 percent were fine with their decisions. The most common wish among rueful buyers was that they’d picked a different make or model, at 14 percent.

An unaffordable vehicle was the second most common regret, at 10 percent, and a failure to shop for a better deal on the vehicle ranked third, at 8 percent. Four percent said they regretted not shopping around on the loan.

However, Americans do warm up to their vehicles over time, LendingTree found. The most regretful population in December were those who bought a vehicle in the past year, with 47 percent of that pool unhappy with their purchase. But only 24 percent of respondents who’d bought a vehicle six or more years in the past regretted it. “Notably, the average car loan term is close to six years,” LendingTree wrote last month.

Like Credit Karma, LendingTree found recent buyers facing financial challenges.

The loan marketplace found 17 percent of all car owners were struggling to make payments in December, but 27 percent of people who’d bought a vehicle in the past year were having difficulty covering the bill. Twenty-two percent of people who’d bought a vehicle in the past year were underwater on it, LendingTree reported.

More money, more problems?

“Counterintuitively, the higher the income, the more people struggle,” LendingTree wrote.

LendingTree found 23 percent of people with household income from $75,000 to $99,999 and 28 percent of people in households earning at least $100,000 had difficulty making car payments at the time of the survey. In contrast, people in household income demographics of $74,999 or less reported they were having an easier time making payments than car owners overall.

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