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Posts Tagged ‘Auto Loans’

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New Car Now Or Wait For Cash For Clunkers?

April 27th, 2009 by Matthew C. Keegan | 4 Comments | Filed in Autos Express

The U.S. Congress is debating the merits of a federal government program where buyers of news cars could be entitled to a hefty discount on their purchase if they trade in an older, gas guzzling or higher polluting model. Dubbed “Cash For Clunkers” the program could stimulate new car sales just as it has in other countries who have rolled out this type of program.

Currently Being Debated By Politicians

Chevrolet MalibuRight now, legislators are debating how to frame the American program, one that could save you thousands of dollars on your next car purchase especially if you are willing to wait until the program kicks in. Once it does, you may be able to save between $1500 and $5500 on a new car besides the discounts offered by manufacturers themselves. Clearly, this could be a once in a lifetime opportunity to buy a new car at an unheard of low price.

In exchange for receiving the discount, you’d turn in your older model vehicle which would then be scrapped. The idea behind the program is to stimulate new car sales (and thereby the US economy) while removing from the road cars which pollute and consumer fuel more than the vehicle being purchased.

Some Questions To Ask Yourself

Should you hold off on purchasing a new car right now?

That depends on a number of things. Some questions to ask yourself can help you determine the best course of action to take:

What is the trade in value of your old car? If you have a newer car that you are wanting to trade in, then you’ll lose money on this deal. Though Congress has yet to stipulate which cars will be eligible, it appears that vehicles that are at least eight to ten years old will qualify. But, even an aged Ford Expedition could be more valuable than the money the government will give to you. Thus, the program would be a bad idea for you from a financial standpoint.

Would you miss a better deal by waiting? Assuming that automotive manufacturers will continue to offer the same great deals now while the scrap program is in place could cost you money. Quite frankly, if the government program does eventually kick in, there is no guarantee that car manufacturers will continue to offer deep discounts as they are offering today. Some car companies are discounting their vehicles by $5000 or more right now or offering other incentives.  These discounts hurt the automakers who might be more inclined to having you get the federal discount instead of one that is coming out of their pockets.

What kind of car are you wanting to buy? Even if the car you’re planning to trade in qualifies (older, more polluting vehicle that is registered and has been owed by you for a certain period of time) for the federal program, the new car you’re wanting to purchase may not. Congress is still debating who will be helped by this program, but it appears that buyers of cars worth more than $35,000 may not qualify. Thus, if you’re looking at purchasing a 2010 Lexus RX450h, you’ll be out of luck even if the beater you’re planning to use as a trade-in is a 1993 Toyota Corolla.

Maybe Now Is The Time To Buy

Of course, right now the federal program is being debated so we don’t know what the final parameters of the bill will be, when it will start and when it will end. President Obama has promised to sign the legislation as presented to him, but billions of dollars of taxpayer money still needs to be allocated to cover the program’s cost. Therefore, if you really need or want a new car right now, you may want to negotiate your best deal with or without the federal government standing behind you.

Adv. — If you are planning to purchase a new car, there are some steps you can take to make sure that you get the best deal. Please visit SayLending.com for auto loans information including new car research to help you find the vehicle that is right for you.

Chevrolet Malibu photo courtesy of GM Corp. and is used herein for illustration purposes only.


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GMAC Ushers In Tougher Auto Financing Restrictions

October 15th, 2008 by Matthew C. Keegan | 2 Comments | Filed in Consumer Financing, Consumer Tips, News

GMAC — once known as the General Motors Acceptance Corporation, the financing arm for GM — announced recently some changes that may impact whether you can finance your next car through them or not. In a bid to counter the lack of stability in the financial and credit markets, GMAC Credit Scoreis now requiring that all credit applicants have a FICO score of at least 700 in order to qualify for an auto loan.

The move by GMAC comes just a few months after the financing arm of GM (51% owned by Cerberus) said that they were curtailing its automotive leasing business. GMAC, like many automotive financing arms, has been hit hard by the rapid devaluation of big trucks, SUVs, and large cars, a move which has contributed to the financing company’s steep losses this year.

You Can Qualify For A Car Loan

For consumers who still want to finance a new car purchase, the news isn’t necessarily bad, especially for the 75% or so of people who meet the minimum threshold. For everyone else there are some steps that can be taken which can still secure a car loan for them. These include:

Raise Your Credit Score — Unless you must buy right now, you might be better off waiting to purchase a new car until after you work on raising your credit score. Obtain copies of your credit reports and find out what may have caused your score to drop. If the problem is easy to correct — let’s say a mistake is found on your report — your score could be adjusted upwards in as little as thirty days. Otherwise, if you’re behind on loan payments, catch up on those immediately — it’ll take longer to raise your score, but in the end you’ll be glad that you did as your interest rate will decrease.

Arrange Your Own Financing – Banks and credit unions may want to finance your purchase too. Their requirements might be different, spelling the difference between you getting a car now or waiting until later. Remember, the lower your credit score the higher your interest rate will be. Is it worth getting the easier approval only to pay more later?

GMAC isn’t the only automotive financing arm raising their requirements, though they are the most visible one given their sheer size.  Despite what you may be hearing on the news, credit hasn’t dried up completely as it is still very much available to people who have a high credit score.

(Source: GMAC)


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For Automakers, The Leasing Squeeze Is On

August 11th, 2008 by Krayton M Davis | 1 Comment | Filed in Consumer Financing, News

One of the big downsides for automakers who provide financing for vehicles through their own financing companies is that these businesses are losing a lot of money. Contributing to the losses is the huge decline in resale values on big trucks and SUVs, vehicles that General Motors, Ford, Chrysler, Toyota, and Nissan have sold in abundance over the past few years.

MINI CooperAs a result of current market conditions, GMAC, Ford Credit, Chrysler Financial and other automotive manufacturer’s financing arms are losing hundreds of millions of dollars annually. In a bid to stem losses, the companies are no longer accepting new leases or severely restricting what they can offer. Clearly, one important financing option is no longer available for consumers, though there could be some benefits which are offered instead.

Can’t Lease From The Manufacturer? Other Options Are Available!

For some consumers, losing the lease option means that they’ll take their business elsewhere. For whatever reasons are important them, holding onto a car longer than the typical 24-39 month lease period is not something they want to do. Fortunately, there are some options for consumers to consider:

Take Your Business Elsewhere — Inasmuch as leaving your favorite automotive brand could be a big move for you, if you want to lease a new car every two or three years, then finding a manufacturer who offers this option is one way to go.

Take The Financing Deal Or Shop Around — In a bid to offer customers an attractive alternative to leasing, automotive financing companies are sweetening their deals. Here, you could find additional bargaining power: instead of financing your car through the dealer, take the rebate and seek financing elsewhere. Your credit union can often match the best financing rate out there allowing you to pocket the $2000 to $5000 rebate offered in lieu of financing.

Take Your Leasing Elsewhere — If you would like to continue with your favorite brand (Chrysler, for example) and the manufacturer is no longer offering leases, you can seek third party leasing elsewhere. Your leasing options (higher down payment, bigger monthly payments, other restrictions) won’t be as attractive as what you would have received previously, but this option is still available to you. In some cases you could get a rebate from the manufacturer while leasing your new car with a third party.

Even BMW is rethinking leasing which is 60% of its U.S. business. Though the German automotive company will not be getting out of this business angle completely, it just may pay for you to consider leasing elsewhere and taking whatever other incentives are being offered instead.

Clearly, the consumer is in the driver’s seat as year to date vehicle sales are down by more than 10% this year. Just like in the housing market, if you are a buyer then deals can be had, but carefully weigh every offer to find the best plan for you.


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Consumers Given Strong Incentive To Buy New Cars Now

May 2nd, 2008 by Matthew C. Keegan | 4 Comments | Filed in Consumer Financing, Money Management

It certainly is a buyer’s market for consumers who want to purchase a new vehicle. With auto sales down year over year compared to last year, many automakers are offering incentives in a bid to move inventory.

Dodge ChallengerNot every model is a slow seller. In fact, if you want to purchase a 2008 Dodge Challenger (pictured), you are out of luck. All of the inventory for this hot, specialty model is spoken for.

So, if you are looking for a new ride what deals are there available to you? Rather than looking at specific incentives (which change frequently) let’s take a look at specific segments to help you the best deals.

Full sized pick up trucks – Across the board, every truck maker is offering incentives. These big, fuel thirsty vehicles are having a difficult time selling, making strong discounts a fact of life. Look for $3-5000 off of most models with discounts approaching $10,000 for some loaded quad cabs.

Sport Utility Vehicles (SUVs) — The larger the SUV, the more likely sales have plummeted. While some automakers are finally cutting production, bloated inventories means that generous rebates and/or financing options are now available to you.

Larger Cars — Again, fuel economy numbers are determining many purchases, slowing down the sale of the largest cars. Big discounts on the Buick Lucerne have priced this car in the mid-size car segment, offering one of the best deals for any large car today.

Midsize Sedans — The most crowded segment in all of autodom as pertaining to the number of competing models, the mid-size car category offers a mixed bag when it comes to deals. Older and slow selling models offer the best deals while the Chevrolet Malibu is selling strong and at full price. Volkswagen, Dodge, Suzuki, and Hyundai probably have some of the best incentives currently available.

Crossovers — Not a car and not an SUV, crossovers are one of the hottest categories today. Offering the room of a SUV with the gas mileage of a sedan, many consumers who need the room are taking a close look at the Ford Edge, Dodge Journey, and competing models to replace their current cars. Are you looking for a good deal on a slow seller? Then consider the Taurus X as one option.

Most small cars are not carrying strong incentives simply because demand for fuel efficient vehicles is strong. Luxury makes such as Mercedes are doing very well, but there are some brands whose inventory is bloated signaling that incentives are available. Some minivans carry incentives too, possibly offering you thousands of dollars off of the sticker price.

When it comes to striking a deal, your choice may be between taking a rebate or choosing cut-rate financing. In almost all cases you would be better off taking the rebate and seeking independent financing elsewhere.

Resources

Auto Purchase Loans

Campus Cars

Smart Money Tips


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