No More Car Loans - Credit Crunch Limits Automotive Purchases
Nice summary over at at Kicking Tires about one of the more immediate effects of the Wall Street Giddyap - no more car loans. By now, even my cats are conversant in the underpinnings of the subprime mortgage crisis (knowledge gained from watching this very funny powerpoint no doubt). But It doesn't take my prescient cat to translate; most banks are treading water from making way too many high-risk mortgages, and are simply shying away from adding to their woes by making way too many auto loans. The takeaway for Gentle Reader is that, in all probability, you will be writing that $40,000 check for the Chevy Volt out of your personal account, or driving what you have for a very long time.KT reports that this includes loans for both new and used cars if you can get one; some banks simply have stopped making auto loans. Dealers say that most credit-worthy customers are having no trouble getting approved for a loan, but when they’re approved they find banks charging them higher interest rates than they were expecting— or willing — to pay. Also in danger are shoppers who are upside down on their trade-in, meaning they owe more than the car is worth. For many years, those shoppers would just roll the amount they owed into their new car purchase; not anymore. Are dealers losing sales because their customers couldn’t get loans? Sure - the General Motors marketing chief Mark LaNeve mentioned that GM is losing about 12,000 sales a month because of credit problems, and Chrysler and Ford report suffering as well.
Number fumbling is not a popular environmental topic, and we are all of course very excited and hopeful about the new green driving technology out there - the Volts, the Prius', the 70mpg diesels, etc. Realistically however, without access to credit most Americans won't be able to afford this new green equipment, certainly not upon its release, and perhaps ever. Thankfully, there is another option - keep what you have and stop driving, maybe even get a passenger to help with the bills. Not only will you not be responsible for bringing another car into this world, you will reduce your debt, miles, and emissions, and maybe make a friend in the process. :: Kicking TiresDebtIs Debt your Destiny?Gen Y is BrokeProtecting your Money in a Declining Economy