Auto Industry Forecasting Recovery

[Oct 8, 2009.]

 

Top GM executives are predicting a 10 percent increase in vehicle sales for 2010. This means that sales would increase from a low of 10.5 million to 11.5 million. This estimated increase in sales falls short of GM's highest sales figure of 16 million units.

Auto Industry Woes: Cause for Sales and Loan Incentives?

This discrepancy could motivate auto manufacturers and dealers to provide sales and loan incentives. In the meantime, shopping for auto loans online and among local financial institutions can provide a good idea of types of auto loans are available.

Shopping Auto Loans: Look at More than Interest Rates

Zero percent interest rates may get your attention, but it's important to ask questions before signing on the dotted line:

• Is the zero percentage (or low interest rate) good for the duration of the auto loan?
• Is this loan fully amortized? Amortization means that scheduled payments will be applied to principal and interest, and that no interest or deferred payment amounts will be added to the loan balance.
• What is the annual percentage rate (APR) for this loan? The APR is the percentage of interest rate, dealer charges, and lender fees expressed as an annual percentage of the loan amount. Although the interest rate for a car loan may be zero or a low amount, the APR may be higher.

Here are some pros and cons of dealer financing and getting a car loan elsewhere:

Dealership Financing:

• Dealers can offer manufacturer or dealer incentives that lower finance charges
• Dealers may work with a network of financing venues, and can help you find a good deal for your situation
• Dealers want you to buy now, and strive to provide "instant" credit approval
• Dealers offer financing to sell cars. If you walk in without having checked other financing options, chances are you'll drive off the lot with dealer financing, but not necessarily at the best rates and terms

Getting quotes from other auto loan lenders before visiting auto dealers can can help determine what you can afford before selecting a car.

Other Sources for Auto Loans:

• Shopping and comparing auto loans before looking at cars can help prevent buying on impulse or overspending
• Financial institutions are concerned about your ability to repay your auto loan; they may provide a credit line that's comfortable for your budget
• Getting quotes from multiple lenders provides support for negotiating with auto dealerships. If you can show that you've already lined up financing, you may be able to negotiate a better price

Taking time to consider your options for auto loans can help in getting your best deal.

 

About Author:

Peter Andrew has been writing about -- and for -- business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.