New Honda Civic Incentives: A Token Gesture?
Perhaps feeling the heat from Toyota on its recent announcement that it would offer 0% financing on the Corolla, Honda this week announced new incentives on the majority of its Civic models. But are promises of low financing all they're cracked up to be?
According to the terms, "qualified buyers" can get the Civic for 1.9% financing for 24 or 36 months. The Corolla's 0% incentive is for a 36-month loan. But as we've seen, it's become increasingly difficult for those with average or good credit to be approved for a low-rate loan. And while most lenders aren't forthcoming about just how good a customer's credit needs to be in order to qualify for the best rate, analysts generally agree that a buyer's credit score must be somewhere above 700 to be considered. Combine that with the fact that many people these days can't afford to pay off a car in merely two or three years, and you soon realize that these offers are moot to all but a select few.
The more realistic scenario for most consumers is to apply for a 60-month loan. Honda has the edge over Toyota here, as the incentive rate on the Civic is 3.9%, compared with the Corolla's 4.9% (or 3.9% for a 48-month term).
Some at Honda will tell you the Civic is selling well regardless, and doesn't need incentives (Honda is notoriously stingy when it comes to deals - it spends less on incentives than any other major manufacturer). But Honda's latest announcement, although not mind-blowing, makes it clear that even a top-selling brand can't afford to be complacent in this economic climate. While Honda is faring the financial downturn better than many manufacturers, sales of the Civic are still down about 14% over last year - that's compared to a 28% decline for the Corolla and a 26% drop in the industry overall.
In addition, Honda also announced it was slashing both down and monthly payments on the Civic, but only one trim level qualifies in our neck of the woods: The four-door LX with an automatic transmission. And Honda isn't offering any cash rebates on Civic, either - but Toyota will knock 1000 bucks off the Corolla.
None of these deals is jaw-dropping, but incentives for these models don't come around too often. If you're already in the market for one of these cars, it could be a good time to buy.
Laura Burstein, Automotive Editor
- Posted by
- Laura Burstein October 29, 2008, 1:29 PM
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- Car Loans and Financing
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- Financing, Honda Civic, Incentives, Leasing, Rebates, Toyota Corolla
If I may play the grouchy grandpa here, I think 60-month loans are what causes so many people to end up "upside down" on their cars. They buy more luxurious vehicles than they really need and they end up in trouble. Been there done that. The payment on my 36-month loan is a bit of a squeeze, but in 18 months it'll be done and I'll have a relatively newish car and enjoy several years of no monthly payment. People need to start living within their means and getting cheaper new cars, or used cars.
On the other hand, Civics and Corollas hold their value so well that you don't get "upside down" as you might in a large SUV or luxury vehicle. I can understand someone accepting a longer term with a lower payment - especially with a low interest rate - for a car such as this where they know that if times get tough they can sell their car quickly and easily without taking a hit.