It's a great time to buy a car
If you can get a car loan it is a great time to buy because struggling dealerships are slashing prices, according to a story in today's LA Daily News. Loan approvals have dropped from about 80 percent to about 50 percent.
"If you have (credit score of) 700 and above, you don't have a problem getting a loan," the story says..."But anyone with a credit score of 650 or lower may be having trouble getting approval.
"In cash terms, a credit score of 720 to 850 could get you a car loan at about 6.7 percent, which means you'd pay about $768 a month on a three-year $25,000 loan, according to Myfico.com, a Web site operated by Minneapolis-based Fair Isaac Inc. The median credit score in the U.S. is just barely in that top financing bracket at 723.
"By comparison, a score of 620-659 qualifies you for a loan at 12 percent, which increases your payments on the same loan by $63 to $831."
Read the full story here.
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About The Bargain Hunter
Daily News staff writer Julia Scott loves to find bargains on everything from groceries to Gucci. Her tips will help keep your hard earned cash where it belongs - in your pocket.
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I've tried to buy a Toyota Tacoma for Cash, but none of the dealers seem to be interested. Their sales are off by 37%, but they want to do "business as usual". They are not serious enough about selling cars. It should not be any more complicated than buying a TV or buying something online. Hopefully, some of them come to their senses eventually.
I bought a GMC Arcadia, list price of $32.8K, for $26.25K, but it took a month of negotiation and walking from one dealer. Bought at Keyes in Topanga. Start with LA Times "loss-leader" car ads and be persistent via email. I only went to the dealer after all was settled. BTW, I have a GM credit card with a $3.5K rebate, so my actual price (excluding taxes/license) was $22.25K for a great vehicle!
We loooove the new car ads...you know, those get one at this loooow price you see in the Friday throughy Saturday editions of the Daily News and Los Angeles (and other papers as well, LANG, OC Register, etc.)
Jon who bought the Acadia got a GREAT deal!
WE have been very lucky/successful at the "ad car" deals, but the dealers (salesperson, his/her manager, the finance/insurance person who writes-up the deal, etc.) HATES them! My counter is if you hate the deal so much, have your owner and/or general manager come in to have a chat about it. That has usually stopped any further discussion. Probably doesn't help when we decline the purchase of any additonal items not already included in the ad car price. During the negotiating sessions, often my husband will hide somewhere when I'm doing the deal (not much negotiating on "ad cars")...LOL
Some dealers are so arrogant, I've had a couple insist they check with my husband becuase it's an "ad car", that I wont like the vehicle or other petty reason. When he informs them that they have to work with me, they turn beat red...kind of funny...but sad this happens even today! Other dealers are great to work with, it just depends on the people involved at the time of the tranasction.
If you are happy with the content of the vehicle and the color, "ad cars" are GREAT deals! What I have found is that some nameplates and brands don't advertise "ad cars" such as Honda, Acura and Lexus, while many Toyota dealers offer them. I understand this to be that at least for Honda, the dealer cannot sell below cost (by order of Honda), where as for Toyota, no prohibition exists (but does for Lexus and Scion).
Also, what gets me is the conditions for the low rate financing from their financing arms such Toyota Motor Credit. What the hell is "Tier 1", meaning the credit score required? When you contact several dealers, you get answers all over the board.
Personally, I finance at the credit union. Some dealers still insist you have to apply for their financing as a back-up. Ok, fine by me. I'm already approved and ready to go from the credit union, I just bring in the check from the credit union a few days later for the exact amount and tear-up the dealer financing. Most times, we just transfer the money from savings and pay off the car, some times not if the credit union has a very low rate on the car loan.
It is however hard to beat no interest financing that some the automakers financing arms are offering.
My hope is that especially for the various GM and Chrysler dealers that will rely on the majority of their financing from GMAC and Chrysler Financial that Cerberus (who owns both financing arms) has lowered the scores to a number that justifies the risk. To me, 700 is just too high as a cut-off. Somehwere in the 600's, probably if risk based pricing is used (translating into higher interest rates).
Many will be interested in the sales numbers from GM and Chrysler, and upon review if the relaxed credit scores have driven sales. My hunch is that sales will still be down year-over-year, but the increased supply of credit may help close sales that were as of recent not bankable through any lending source.
Lastly, anyone with a credit score over 720 who is paying more than 6 percent should shop around. Wescom credit union (which is open to any resident, worker or worshipper of southern California, and no employment association is required) has rates as low as 5.99 percent for 100 percent financing on new car loans.
Here's the links:
https://www.wescom.org/rates/auto.asp
https://www.wescom.org/aboutus/joinwescom.asp
Disclaimer: we have some accounts at Wescom, however, most credit unions should offer competitive rates.
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Not that I have the money, because I don't (and I don't know who does), but who in their right mind would buy a new car when the prospect of being unemployed becomes more real with each passing moment?
That's what's killing "consumer confidence": a total lack of confidence.
Not that I have the money, because I don't (and I don't know who does), but who in their right mind would buy a new car when the prospect of being unemployed becomes more real with each passing moment?
That's what's killing "consumer confidence": a total lack of confidence.
Steve raises a very good point. Some who are gainfully employed may not be the next day, while others who are retired or have a necessity based need for a car (school, work, accident, etc.) will still have a need for a car, or the financial means to purchase one.
Some may elect not to purchase a brand new car and may go instead with a used car. Others will still purchase a new car, but may move down from Lerxus to Toyota, or move from a larger model to a smaller model.
If I were working for Dean (not so much Carolina and your recently departed publisher), it seems its like day by day at the Daily News. I would be under a great deal of stress just trying work in a professional manner while writing a column or covering a story and in the back of my mind wondering am I the next to get the tap on the shoulder.
You write a very good column! Maybe you could join forces with Julia if ever you two were to leave, AND make money at it by helping people through your columns and advice! You both seem to have a knack for saving money, you more on the technology side of things. People will pay for good, sound and usable advice!
SO_CAL_RETAIL_SLUT