Some Things You Probably Aren’t Thinking About as a Dealer When It Comes to the Rise in Interest Rates

We all know the easiest way to stem inflation is to increase interest rates. Well, the Fed just did that, and it will probably happen again soon.

And while rising interest rates impact more than you think (monthly vehicle loan payments just got more expensive, 例如, 除非客户增加他们的首付款), 我的第一个想法是，这可能没那么糟糕, since most of the dealers we work with aren’t charging over MSRP. So, does this just decrease demand to w在这里 supply is? Peeling back the onion always brings about more things to think about. 例如:

• Does a higher monthly payment make a customer decline the F&我的产品?
• Does a customer lengthen the term of the loan, and how does this impact a dealer’s GAP insurance?
• How are we going to pay for the facility upgrades coming our way?

让我们再深入一下最后一点. Did you know that the 税 Cuts and Jobs Act changed the interest expense deduction for 2022? 根据现行法律, interest expense deduction is based on a 税payer’s adjusted 税able income (ATI), which is basically earnings before interest and 税es (with some other adjustments). A 税payer can only deduct, in the current year, up to 30% of ATI. The floorplan interest expense is still deductible, but you might lose out on bonus depreciation I mentioned back in February. 点击 在这里 for more information on potentially ending bonus depreciation expense early.

设施升级贷款, 与此同时, just got more expensive based on the increased interest rate and the potential delay in the deductibility of the expense. Any interest expense that exceeds 30% is nondeductible in the current year but is carried forward indefinitely until the expense is below this threshold. I encourage you to think about solutions like evaluating your rent, etc. 点击 在这里 for the rent consideration that could potentially be a solution like we discussed back in February to help alleviate this trap of nondeductible interest expense.

现在是行动的时候了. Be proactive to see how this interest expense impacts you. 伸出手去 史蒂夫·巴伯 或者我们的 施耐德唐斯汽车顾问公司 寻求帮助.