TO THE EDITOR:
Prime customers, who are paying an average of 4.9 percent, would be out of the market longer than usual, but they likely have the potential for future income growth to return to the dealership early to trade.
But the 4 out of 10 car buyers who are not prime customers have little to no chance of trading early. In all likelihood, they have other debt issues and less opportunity for upward mobility to earn their way out of the problem. Seven years is a long time. If they do make it to the end of the term, they may simply decide to just drive the car until it dies.
For these customers, dealers should aggressively shift their focus to service retention because that's the only way to earn money from this segment for the foreseeable future.
Lenders should also consider declining interest rate loans for these less-than-prime customers with ultralong terms. For instance, if they've made on-time payments for half of the seven years, knocking off a point or two going forward would go a long way toward gaining customer loyalty and helping dealers get some of these customers back into the showroom.
ROBERT STEENBERGH, CEO, AutoPayPlus, Orlando, AutoPayPlus provides automated payment services for auto and other consumer loans.