According to a recent report from Edmunds, the average price gap between new and used cars has exceeded $20,000 for the first time in history. With new car prices soaring, many car shoppers are now pivoting to the used car market, where prices, while still higher than before, are relatively more affordable. This trend spells good news for used car dealers, as they can expect a boost in business over the next year. However, with increased sales volume comes the need for streamlined and secure payment processing solutions.
The Price Gap: A Growing Opportunity for Used Car Dealers
As of Q3 2024, Edmunds reports that the average price of a new car has risen to more than $47,000, up nearly 10% from just two years ago. Meanwhile, the average price of a used car has climbed to just under $27,000. The result? A gap of over $20,000 between the two vehicle categories, with many consumers now choosing used cars over new ones. This shift is expected to persist, as the cost of new cars remains high due to a combination of supply chain disruptions, rising material costs, and inflation.
While this price disparity creates a financial challenge for consumers, it also creates a growing market for used car dealers to tap into. More shoppers are now turning to used cars, even if they had initially set their sights on new vehicles. In fact, Edmunds forecasts that used car sales will account for a larger share of the market in the coming months as more buyers realize they can save significantly by opting for a pre-owned vehicle.
The Challenge: Securing Payments in a Booming Market
While the demand for used cars is expected to increase, so too will the number of transactions that dealers must manage. This uptick in business places greater pressure on dealers to efficiently process payments, particularly down payments. In an age where credit card fees are becoming increasingly prohibitive — often ranging from 2% to 3% of the transaction — more customers are looking for alternative payment methods, with checks emerging as a popular choice.
However, accepting checks comes with its own set of challenges, primarily the risk of bounced checks or insufficient funds. Dealers need to be confident that the payment they are accepting will clear without issue. That’s where CrossCheck’s Automotive Payment Solution comes in.
How CrossCheck Helps Used Car Dealers Streamline Payments
CrossCheck’s Automotive Payment Solution includes Remote Deposit Capture, Multiple Check and Check on Delivery. Perhaps most importantly, this suite of services includes Check Guarantee, which is designed to eliminate the risk associated with check payments. If a check is returned for non-sufficient funds or a stop-payment order, CrossCheck will assume the risk beforehand and ensure the funds reach the dealer’s account. This is especially important as both dealers and customers seek to avoid the high fees associated with credit card payments and turn to checks as a more cost-effective option.
The Benefits of Check Guarantee for Dealers
- Guaranteed Payments: CrossCheck’s Check Guarantee service ensures that the funds on every check processed is guaranteed. This protects dealers from the risk of bad checks, ensuring a seamless transaction.
- Lower Transaction Costs: By encouraging customers to pay via check instead of credit card, dealers can avoid the high processing fees associated with card payments. This means more of the sale stays in the dealer’s pocket.
- Faster Transactions: CrossCheck’s system is fast and efficient, ensuring that dealers can process payments quickly, even when dealing with a high volume of transactions.
- Better Customer Experience: When customers know that their check payments will be guaranteed, they are more likely to feel confident in their purchase. This can lead to faster decision-making and smoother transactions.
A Growing Need for Payment Flexibility in a Booming Market
As used car dealers experience a surge in business, having reliable and cost-effective payment solutions will be key to ensuring smooth operations and customer satisfaction. With many buyers opting for checks to avoid credit card fees, CrossCheck’s Check Guarantee service provides dealers with a secure way to process payments while offering customers a more affordable method of paying for their vehicle.
The price gap between new and used cars is expected to remain substantial, driving more customers to the used car market. To capitalize on this opportunity, dealers need a payment processing partner they can trust to manage the increased volume of transactions without the worry of bounced checks or high fees. CrossCheck is here to provide that peace of mind, ensuring that both dealers and customers can focus on what matters most: finding the right car at the right price.
The CrossCheck Solution
CrossCheck’s Automotive Payment Solution is a comprehensive, all-in-one suite of check guarantee services designed specifically for auto dealerships. This package includes three essential and integrated services that work together: Remote Deposit Capture (RDC), Multiple Check, and Check on Delivery. These services are offered as a comprehensive package, providing a complete, seamless solution for all your payment processing needs.
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