First, Nissan double subprime loans. He is now prepared to pay more money to dealers when customers sign up for longer terms. This is the new plan that Nissan presented to dealers, according to a report by Cars Direct.
Nissan calls this the future of NMAC dealer compensation, referring to its financial arm, Nissan Motor Acceptance Corporation. In the plan, when customers finance their loans through NMAC, Nissan will pay dealers 1% of the total amount financed.
But it’s getting better.
Cars Direct says that in the fine print, you’ll learn that dealers will receive up to $ 450 when customers opt for 84-month financing. Nissan appears ready to steer people into financially precarious loans for the benefit of dealer profits. It’s not about putting the customer first.
All of this has the potential to be bad on many fronts. The main problem is that it disproportionately affects – or outright targets – low-income people and minorities.
How? ‘Or’ What? Some dealers may discriminate. Judging people is one thing when it comes to car sales, as a test conducted in 2018 by the National Alliance for Fair Housing using two couples at dealerships in Virginia, one black and one white. Their results showed that 63% of the time, black clients received higher interest rates on their loans, even though they were more qualified than their white counterparts. The potential effect is that buyers with higher interest rates would choose longer terms to reduce their monthly payments.
This is all linked to another problem as well. Dealers will be inclined to offer customers longer terms to get higher compensation for the dealership. Suspending the lower payments that come with the 84 and 96 month loan terms could cause problems for clients as the loans are underwater – due to more than the car’s value – especially with the brands. and models that have steep depreciation curves.
Nissan is one of those brands. A Altima for example, with an assumed selling price of $ 26,453, 59 percent after only five years. What about five-year depreciation of a seven-year loan with a high interest rate? It doesn’t bode well for anyone. The sad part is, I’m sure Nissan dealers would be more than willing to welcome these customers again, turning that negative equity into another loan to fill their pockets again.