Credit Crunch Dinging Dealers
Two weeks ago to the day, Frank Williams provided a heads-up on the impact of the coming credit crunch on new car sales. Automotive News [AN, sub] now reports that some small regional banks have stopped making loans through auto dealerships. Even the big boy's auto loan departments– Chase Auto Finance, AmeriCredit Corp., Wells Fargo Auto Finance, Mechanics Bank and Sovereign Bank– are reining-in their metaphorical horns. And that's led "many would-be consumers to buy cheaper models, or purchase a used vehicle instead. If customers with shaky credit can get loans at all, often they must make a bigger down payment, pay higher interest rates and accept loans of shorter duration." And here's the kicker: "Consumers with subprime credit ratings buy nearly 30 percent of all new vehicles." Oh wait, that's not the kicker. This is: "Dealers are more dependent than ever on automakers' captive lenders. The captives appear more willing than independent lenders to make subprime loans in what is shaping up as the worst year in a decade for new-vehicle sales." Which will be true (the loan part) right until it isn't. And if GMAC goes down, look for all Hell to break loose.
More by Robert Farago
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There IS no positive side when you have a regular job and a mortgage (sub-prime, at that), a car payment (at least it's an Accord), and driving is one of your (my) favorite things. I don't mean to be the downer, but most of us out here live in the real world. With real problems.
I've got an $18/hr Government job and good credit(805 FICO). The bank I've been with my entire life recently would only pre approve me for an $80,000 home loan. What happened to the days when they'd literally loan any amount to anyone? I told them to keep it as I couldn't buy anything decent with that pittance of an amount. Who needs that money more: me or them? I guess them. Pretty sad when a bank is hard up for eighty grand.
Thank you, rtz. Glad you're "down here" in the REAL WORLD with the rest of us!!! That was refreshing. (And I do NOT in any way mean that in a derogatory fashion. We are in practically the same sinking boat...the middle class.) And I don't think we have strayed too far from the subject. Sorry if we have, Mr. Farago....we still love you!!!!!