Auto Loans: GMAC Prepares to Acquire Chrysler Auto Financing

[May 21, 2009.]

 

Federal regulations were waived to accommodate the expected acquisition of Chrysler auto loans by auto financing giant GMAC. The willingness of the federal government to alter regulatory requirements is viewed as a sign of the federal government's dedication to saving the US auto industry. 

In addition, the government is also expected to provide GMAC with an additional $7.5 billion, which will be used in part to fund new Chrysler auto loans. GMAC provides short term loans to auto dealers as well as to consumers; if GMAC is allowed to fail, the repercussions could travel much further than the auto industry.

Auto Loan Options Available

Although it can be a matter of convenience to get an auto loan through a dealership, banks, banks and credit unions also provide auto loans at competitive rates. Given the current upheaval in the auto industry, consumers may prefer to finance their vehicles with the same lenders that hold their checking and savings accounts.

Loan Shopping Tips

• Shop and compare auto loans: Before visiting dealerships, it's a good idea for consumers to compare loan options first. Compare interest rates, repayment terms, and evaluate the features of auto loans being offered. This enables consumers to approach dealerships knowing how much they can borrow, and what to look for in an auto loan.


• Ask questions and more questions: Car buyers should ask as many questions as needed to determine what they need to know about the cost of the car they're buying and the terms and conditions of auto loans they're considering. The Federal Trade Commission advises consumers to verify advertised financing terms  offered by car dealers, as th may include features and conditions including limited repayment terms, a large down payment, balloon payments, or inflated auto prices that cover the lost of low interest rates on auto loans. Promotional financing may only be available on certain autos or models; being flexible with vehicle choices may lead to additional savings.


• Determine affordability in advance: Certain types of auto loans may facilitate the purchase of a vehicle that's not financially feasible. It can be tempting to buy a "dream ride," but it's not worth missing payments and repossession.

As the US auto industry continues to change and establish new priorities, it will be interesting to see how auto loans will change to accommodate emerging auto trends and consumer needs.

 

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.