Car loans and the credit crunch

tishtoshnm Zone 6/NMSeptember 18, 2008

Is anyone aware whether or not the current credit crunch is also affecting obtaining financing for a car. Dh was in an accident almost a month ago and his paid for car was totalled. We are awaiting the settlement from the guilty party's insurance company. I am beginning to become concerned that the current market will make it difficult to obtain financing.

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neverdunn

People with good credit and reliable payment history will not have a hard time getting a car loan. If he paid the first car off with no problem, you may want to contact the same bank for your new car.

    Bookmark   September 19, 2008 at 12:03AM
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triciae

I can tell you that my DH is head of all lending for a large regional bank. As of Wednesday of this week...he stopped lending to anybody with credit of less than 720. Like I said, that's all lending...real estate, business, cars, CCs...everything.

Now, with this morning's financial news...all bets are off as to what will happen to the availability of leverage next week??

If you've got a credit score of 720+ you'll be fine getting a car loan anywhere...less than that & it's iffy right now.

/tricia

    Bookmark   September 19, 2008 at 10:00AM
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tishtoshnm Zone 6/NM

Thanks for the info. The last car was paid off through Toyota several years ago. We paid our truck off this year through Capital One and we were considering pursuing that option. We have an excellent payment history but I am not sure if we are at the magic 720 or not. I will be checking on that this weekend.

    Bookmark   September 19, 2008 at 12:02PM
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western_pa_luann

Can't you just pay cash with the settlement?

    Bookmark   September 19, 2008 at 1:34PM
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mulchmamma

Got zero percent financing with Toyota a few months ago. Auto makers are hungry and will offer a deal. You could send an email to your local Toyota dealer and tell them what you wanted. If your credit is good enough, you could get your way.

    Bookmark   September 19, 2008 at 2:15PM
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partst

I have to agree with Tricia, My DH is a director at a large dealership and they are having a hard time finding financing for any one with less than 700 credit score. Sales are down a little not because they donÂt have customers wanting to buy but because of the stricter lending guidelines.

    Bookmark   September 20, 2008 at 12:24AM
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triciae

Suggestion: Try a credit union that offers CUNA insured loans (these are credit insured loans & there are about 100 credit unions across the country that offer these). For these, they'll go down to a credit score of 600. Expect to pay a higher interest rate.

/tricia

    Bookmark   September 20, 2008 at 10:41AM
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joyfulguy

My dad, a practical, plain-spoken farmer, used to say, and I agree, that his car had one job - to get him from this place to that, and back, without a lot of hassle.

I haven't bought a new car in over 30 years, usually figure to pay less than $3,000. for one often about 10 years old or so and buy it for cash.

If I get a lemon occasionally - it hasn't cost me an arm and a leg ... even if I scrap it, I'm money ahead, long-term.

In today's downsizing economic environment, with the wealthy parts of the world seeing their high-priced jobs disappearing like a puff of smoke, that seems all the more important.

Put on your thinking cap, try to remember all of the mechanics that you've known over the years (plus, ask friends, colleagues).

Talk to one/some of them, to get an idea of some things to watch for when buying a "pre-owned" car (there's also one of those four-letter words that apply, but hasn't been used much in recent years).

Make a deal with a couple to check out cars that you're interested in.

Some of them may know of a high quality vehicle available for a reasonable price - e.g. a senior's who's quitting driving (or who recently left this world). Some others of your friends may know of such, as well - usually you won't find out if you don't ask.

Go looking for a car, privately - avoiding the dealer's substantial overhead.

Check the classifieds for a while - to avoid "curbsiders".

In our province, we have to buy a record of a vehicle's pedigree from the D.M.V., which helps to avoid getting stuck with a stolen one.

If the mechanic listens to one, takes a quick look, tells you to get out of there with that piece of junk - pay $10.00.

Checks out one some - pay $20.00.

Gives one a more thorough check - pay $50.00: if you avoid one trip to the garage, and paid out under $200. ... you're money ahead!

You could even afford two of them including licence and insurance, with the second as back-up, for less than many put into a new one.

Or, if you have minimal use for a second car ... if your only (rather than "main") car quits and you have to have it for your work - rent for a period while yours is being fixed.

There's more than one way to fly: I'm not big on flying fancy kites.

ole joyful

    Bookmark   September 21, 2008 at 6:10PM
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ginih

I haven't bought a new car in over 30 years, usually figure to pay less than $3,000. for one often about 10 years old or so and buy it for cash

What if you have to drive your kids to school each day, up a steep mountain, in the winter? That's the dilemma I'm in. I have no car payment but my 2001 van has been towed twice in the last 2 months and it only has 75k mi on it. Not sure which is worse--the worry or the payment.

    Bookmark   September 21, 2008 at 6:23PM
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kellyeng

I work with dealerships across the country and I've asked this question to several GMs & F&I guys. All of them say that they still have bad credit programs and virtually anyone can still buy a new car with a few changes:

- Must provide proof of income.

- They actually call references now.

- Interest rates are higher.

- Banks are charging the dealerships an upfront fee for bad/low credit score customers. They, of course, pass this fee on to the customer.

Certainly possible just harder and more expensive.

    Bookmark   September 22, 2008 at 1:48PM
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tishtoshnm Zone 6/NM

Ole Joyful, I agree with your father's maxim but I would add that said vehicle should protect you as much as possible in the case of an accident. The only reason why I have even considered the newer Camry's (2007) is because that is the year that many safety features became standard. My husband will be driving the vehicle 100 miles a day during the work week. Sometimes, our kids will be in that vehicle also so it is worth it to me to have the additional air bags.

Dh did check his score and it was fine at 768. When we applied for the loan, there was absolutely no problem and I felt that the interest rate was reasonable for a used vehicle. Even if we had received 0% financing on a new vehicle, the savings would not have been significant enough. The one thing that dawned on me though is that the insurance company will not reimburse us on the sentimental aspect of the car. My last son was born in the front seat of that one.

    Bookmark   September 22, 2008 at 11:06PM
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joyfulguy

Hi tishtosh in the warm south,

Surely your health insurance people should at least have treated you to dinner, since there wasn't the need to pay for the use of a delivery room (plus staff)!

Back in '57, in the days of the U.S.-built land yachts, my father-in-law-to-be, while he was delighted to see his daughter, unexpectedly, was concerned about her having travelled from Ithaca, N.Y. to Des Moines, IA in a tin can called a VW Bug ... with plans to then travel to London, ON, and Pittsburgh, PA. ... and was very minimally mollified by my suggestion that with a quick twist of the wheel, the little car would scoot to one side, to avoid an accident, were the alert driver to see one coming.

My old Marquis, Dodge and Plymouth, then Pontiac, a few years ago, were fairly solid, the '65 Rambler perhaps somewhat less so, and the Dodge Colt even less so ... but I think that the current Mazda is moderately strong: the former owner was an auto insurance adjuster, and I doubt that he'd want to have driven a really risky one.

I haven't been charged with driving kids for over 35 years.

Sometimes in rural communities, many of the families know one another well and if the driver of a car that becomes disabled has a cell phone, often can find a neighbour willing to come to pick them up, if the vehicle needs towing and there are too many in the car to fit legally into the CAA/AAA tow truck.

Good wishes for meeting your life-needs effectively ... and as frugally as possible.

Save now ...

... invest wisely ...

... retire early ...

... (or maybe involuntarily, when your plant closes).

In the latter case ... the thicker the cushion, the better ... and the fewer fingernails get chewed down to the quick!

ole joyful

    Bookmark   September 23, 2008 at 2:42AM
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triciae

The weekend of H. Ike, my DH was in a car accident on I-84 near Danbury, CT. Somebody two cars behind was tailgating, hit the car behind DH & pushed that car into DH. It was not pretty & one woman left the scene in an ambulance with the sirens howling. My DH, while hurt, walked away with a couple nasty bruises & some sprained muscles. IMO & that of the first patrolman on the scene, his Acura DMX saved his life. He drives 250+ miles/week. Buy the safest car you can afford. Fancy electronics are fun but not necessary. It's worth paying for life-saving technology. There's about $12K in damage to his 7-month old Acura DMX...the rear was pushed all the way to the front passenger area. DH missed 1-1/2 days of work & has to go to PT for a few weeks. Both the police & firemen on site told him that in a lesser vehicle he likely would have been killed & the car totaled.

Know the type driving you do & its risks. Buy accordingly. Frugal is good. Safety is better.

/tricia

    Bookmark   September 23, 2008 at 7:16AM
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Pipersville_Carol

The last time I bought a car (looking for a reliable 4x4 with city mpg over 20) I chose a new 2005 Matrix because it had side airbags. I could have gotten a used Rav4 for about $3000 less, but figured a head injury would cost a heck of a lot more than three grand.

Hopefully it'll be the last brand new car I ever have to buy.

    Bookmark   September 25, 2008 at 1:45PM
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