Car Loan

Today, I am going to talk about car loans for private users.

The other say, I asked a salesperson of a loan company JPC is affiliated with about the percentage of people who have loans. According to him, it is approximately around 20% for the purchase of new cars and 20 – 30% of used car buyers. Looking at car prices, the lower the value of the car the more people are likely to use a loan. Recently car sale numbers have been dropping dramatically, so dealers desperately want to make a profit from these loans.

At JPC, among all the private customers, about 20% use car loans. The reason for the figure being a bit lower than average is that we deal with relatively expensive ranges of cars. The interest rate is 4.9% fixed and the maximum borrowing period is 6 years. This is not a special loan, it is the same as at any other dealers. However, although this is the same product, the interest rates seem different. How come?

To show you the trick, we provide the interest rate the affiliated loan company gives us straight to the customers. Some dealers might sell this with a 5.9% rate of interest. The difference is if they consider loans as a way of making profit. Because being customer oriented is our policy at JPC, we are not after any profit from the loan so that customers can buy cars cheaper at auction. We are happy if you can get cars cheap with a low interest loan.

Most used car dealers are not like that, though. Loans can be a great source of income. For example, if they set the interest rate at 5.9%, the 1% difference would be their profit. Simply calculated, if someone buys a JPY2,000,000 car and signs with a 5 year loan borrowing 100%, JPY2,000,000×1%×5 years=JPY100,000 is going to be in their pocket. (In reality, this figure would be a bit lower because the interest rate gets lower as the time goes.) Especially when buyers purchase their cars, there seems a pattern that they usually love them at first sight and without thinking much just sign up to a loan; which can be a high interest one.

How about the dealers (such as most imported car dealers) who provide loans with lower interest rates? When you walk pass those dealers, you will see a sign saying “Limited offer! Loan at 1.9%!”. This seems very attractive and eye-catching. Have you ever wondered if it is true? The following story is real and from Mr A, one of our Japanese customers.

When he went for a walk, Mr A saw a Mercedes Benz C200 displayed in the show space of a dealer with the sign about a loan with 1.9% interest rate. He liked the car, so went inside the shop. A well-dressed salesman came to talk to him and confirmed the interest rate. He even said that Mr A can sign up on the spot! When someone shows you such a low interest loan, even when you are just browsing, you will be tempted to buy it on impulse. (Mr A was slowly falling into the salesperson’s hands.) Mr A made sure if there was anything else which was going to cost him, the salesperson said there is no deposit or no hidden cost. Then he asked for a discount but was turned down because they are providing a low interest loan. When Mr A could not make up his mind, the salesperson sweet-talked him about a test drive of another C200 in the shop. Without hesitation, Mr A got into the car. To be continued…


★ Japanese used car stock : http://jpctrade.com/stock/index.html
★ JPCTRADE Home page : http://jpctrade.com/
★ JPCTRADE Blog : http://jpctrade.blogspot.com/

(Editor)
JPC TRADE CO.,LTD.
Kato building 4F, 1-1-2 Furuishiba, Koto-ku, Tokyo
Japan Used Motor Vehicle Exporters Association (JUMVEA)
TEL : +81-3-5245-7731
FAX : +81-3-3643-4955