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Should you consider applying for auto loans if you're a subprime borrower?

[Dec 26, 2011.]

 

Consumer Reports issued a press release on Dec. 20. And it made frightening reading. All too many of us are putting off essential repairs and servicing on our cars, and that can have serious consequences. Not only can postponing necessary maintenance lead to problems becoming more expensive to fix further down the road, but it can also put you, your family and other road users at greater risk of being involved in an accident.


Scary statistics


Some of the responses from those who participated in the Consumer Reports survey were scary:



  1. Seventeen percent said they had put off replacing "wear items" such as brakes, light bulbs and tires. Among those aged 18-34 years, that rose to 21 percent.

  2. Twenty-two percent had postponed services that were due under manufacturers' recommended schedules.

  3. The average respondent's odometer read 78,000 miles, a phase during which proper vehicle maintenance is especially important.


Jeff Bartlett, the deputy online automotive editor for Consumer Reports, commented:



The family car is the second largest purchase a consumer can make. It's also often one of the most abused. We expect our car to work even in the harshest conditions. So protecting that investment should be a priority, especially when it becomes a safety issue.



Help at hand


Consumer Reports says that it has an online tool that can help you get your head around many of the repair and maintenance issues that you face. Its Car Repair Estimator allows you to input the make, model and year of your car, along with your zip code. And it promises to "help drivers understand common problems, learn how components work, and receive a service estimate that reflect [sic] local prices."


But what if, for you, things have gone beyond that? The survey found that 67 percent of respondents cited "safety concerns" as a reason behind their decision to replace an existing vehicle. Well, the good news is that auto loans are now more widely available to those with financial issues than they have been for some years.


On Dec. 20, CNBC quoted data from CNW, an automotive research company, that suggested that 15.72 percent more auto loans were approved for subprime borrowers this month (December) than were last month. Indeed, CNW claims that, during 2011, the number of approved subprime auto loans jumped 53.9 percent over last year.


Auto loans must be manageable


On Dec. 22, FreeScore.com published the results of a different survey. This found that, on average, consumers spend four hours each day either worrying about or thinking about debt. Eleven percent of respondents claimed that they spent 10 hours a day doing that. Whether or not you believe those figures, it's clear that many, many Americans find debt a huge issue, and you won't be doing yourself or anyone else any favors if you take on financial obligations that you can't comfortably manage.


However, you might want to rethink your priorities in the light of Consumer Reports' data. If your current car could be a danger to you and your family, you may want to think about changing it. Build into your thinking that you could probably make savings on maintenance and gas prices if you choose a replacement vehicle with care.


Please don't take on financial obligations that could cause you problems later, but, if you do decide to change your car, be sure to find competitive quotes for auto loans before you sign a finance agreement. And, whatever you do, have a great -- and safe -- 2012.

 

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.

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