Car buyers who suddenly saw credit dry up last fall might describe that disastrous feeling as something akin to having no oil in a car.
"The oil was taken away, and the engine was locked up," said John McDonald, a spokesman for General Motors Corp. in Detroit.
So as the Detroit auto show highlights a new world of hybrids and high-tech battery-powered cars, the major concern for most consumers continues to be last year's pitiful model for auto financing. Can they get a car loan? And if so, how many hoops will they have to jump through to get it?
Credit, while still an issue, appears to loosening up from the extremely tight standards that hit in late '08. Thanks to federal bailout money, GMAC LLC in late December lifted some strict roadblocks that stopped some consumers from qualifying for car loans. Going forward, the Feds have more credit-crunch tricks that could grease the skids for car loans, too.
Still, will credit be more accessible this spring as consumers hit showrooms?
"Logic should suggest that it should be a bit better because it was so bad," said Mark Zandi, lead economist at Moody's Economy.com.
Credit was so tight late last year that GM's McDonald said industry sales in the final months of '08 were below replacement levels -- meaning some consumers who needed cars weren't buying.
Chrysler CEO Robert Nardelli said last week at the North American International Auto Show that auto dealers could boost car and truck sales by about 25% if consumer credit was more readily available.
On Friday, the U.S. Treasury added Chrysler Financial, the credit arm of Chrysler LLC, to rescue efforts. Chrysler Financial received a $1.5-billion, 5-year loan to assist with consumer financing of Chrysler vehicles.
Chrysler immediately said Friday that it would begin offering no-interest loans of as long as 60 months after the finance arm received the $1.5-billion loan.
Fortunately, there is more oil in that credit engine. Consider:
• Consumers with credit scores of 621 or higher may qualify for a car loan through GMAC. That change, announced a day after the U.S. Treasury said it would inject $6 billion into GMAC, makes car loans more available to consumers with good, but not excellent, credit.
Last fall, GMAC said tight credit markets drove it to stop making car loans to consumers who didn't have a credit score of 700 or better.
After the credit markets froze, about 26% of consumers with good credit couldn't get a car loan in October, according to CNW Marketing Research in Bandon, Ore. That compares with about 15% in October 2007.
The lower credit-score limit "does help us get back to a more normal state of automotive financing," said Sue Mallino, director of communications for GMAC in Detroit. She said auto lending is restored to potentially cover about 90% of GMAC's historic spectrum of consumers. GMAC is not making car loans to subprime borrowers.
• A program called "Invest in America" was rolled out nationwide at credit unions in January. GM is offering supplier pricing on eligible new vehicles for credit union members. For the GM discount, you don't have to get your financing at the credit union to be eligible.
Chrysler's discounts are dependent on being a credit union member and getting credit union financing. At Chrysler, members of participating credit unions can receive up to $1,000 in bonus cash incentives, depending on the model.
David Adams, president and CEO of CUcorp, which spearheaded this effort, said now about 90 million members of nearly 8,000 credit unions would have potential access to low-interest loans for GM and Chrysler vehicles. CUcorp is a wholly owned subsidiary of the Michigan Credit Union League.
• Next month, a new Federal Reserve program is to buy asset-backed securities for different consumer loans, including auto loans and leases relating to cars, light trucks, or motorcycles and loans for auto dealer floor plans.
"The securities market for auto loans is still a mess," Zandi said last week.
Many express hope that if the Fed's strategy works, credit could be more available for car loans.
Gary Allgeier, director of finance for the Suburban Collection in Troy, said the Fed's efforts are necessary to refuel the credit markets. Without the Fed's plan, he said, the banks and auto manufacturers wouldn't have as much money as necessary to make as many car loans. The ability to sell asset-backed securities to investors is essential.
"That's what allows the credit engine in America to continue to work. Without it, it stops," said Allgeier, whose company is the largest dealership group in Michigan and the 15th-largest in the country.
Make no mistake, credit is available. Even so, consumers could find far more restrictions -- and find it way tougher to get credit if they're higher credit risks -- than two or three years ago.
"Lenders were pushing the envelope by extending auto loans and leases to marginal buyers and borrowers," Zandi said.
Gone are the days when practically everybody who had a driver's license could buy a new car.
"I'm rather certain that we're not going to see any re-emergence of subprime lending," said Daniel Alpert, managing director at investment bank Westwood Capital.
Expect more credit restrictions. Expect to be denied a car loan if you have bad credit. Expect to pay higher interest rates if you can get a car loan but do have credit that is not great.
Philip Reed, senior consumer advice editor for Edumunds.com, said consumers who haven't shopped for a car in a while could be surprised to see that they're now being asked to make a down payment on a car or truck.
And he suggests that it could be a more financially savvy move to put 20% down -- and pick a model or vehicle priced at a level where you can make a larger down payment.
Some consumers might buy a $20,000 car, not a $35,000 SUV.
Right now, many consumers are over-leveraged when it comes to debt and many fear losing jobs. Such troubles will likely limit the available credit -- and limit car sales in 2009.
"You still need that guy to want to get a car. But that guy already has credit card debt up the wazoo," Alpert said.
Even so, GM's McDonald said some consumers have been out of the market for the past six months or so because of tighter credit conditions and he expects that '09 sales could get a boost from that pent-up demand as credit continues to loosen up.
Source: http://www.freep.com/article/20090118/COL07/901180460/1081/SUSAN+TOMPOR++Freed+credit+may+spring+auto+sales
Friday, January 23, 2009
Sunday, January 11, 2009
College Student Car Loans - Supports Your Car Buying Needs
You are always late for your classes and never reach on time? Does public transport consumes a lot of time? Tired of traveling through buses? Looking for convenient way to travel easily and reach on time? College student car loans have been personalized for students, you are provided with funds so that you can purchase car for yourself. With these loans you can easily accomplish your needs.
If you get a co-signer then it becomes easy for you to get loan approval quickly and entail lower rates of interest as well. Your cosigner could be your parents or guardian. When your loan is co-signed by anyone this means in case of your inability to repay your co-signer will pay off the loan amount on your behalf and will be held responsible.
You can get finance easily for purchasing a new car or an old one depending suits your requirements and financial standing. The loan amount depends and is decided on the basis of model and make of car that you intend to purchase. You are free to choose any brand and any model that you want. The car loan amount may go up to 80-100% of your finance requirements according to your credit condition. The borrowed amount has to be paid back within a time period of 2-7 years.
Suffering from poor credit records! You need not worry, because college student finance is open to all. Even bad credit borrowers facing CCJs, IVA, defaults, late payments, missed payments and arrears can easily apply. Now anyone can borrow funds and fulfill their car buying needs easily.
The most feasible way to apply is online. It requires less time and has fast processing. You have to fill up a simple online form. Also you can search for affordable deals easily. One can even apply through banks and other financial institutions.
This is one such finance program that specially caters student's car buying needs. You can easily grab the loan amount and buy the car that you need.
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