Ally Bank is a financial institution created from the old GMAC. They are an internet based bank that has been trying to gain market-share by offering better interest rates than the competition. Now, starting October 1, 2009 they will be making a strong push to get car dealers to finance their customers through their bank.
So, based on their business principle you should assume nothing but the best rate possible from an Ally loan. This is where you need to be careful; Ally is giving big incentives to dealers. Dealers will want to put that money in their pocket. If your dealer tells you that Ally will be your lending institution ask what the rates are from other banks. Do not be surprised if their response is, “another bank has the same rate as Ally…” but you get a silly reason to do business with Ally like, “but Ally is better to work with.” That’s nonsense. At this point you should pressure the dealership to give you a better rate. Tell them you are aware of Ally Banks incentives and as the one who’s going to be making the payments, you feel you should share in their incentives. Mention that you can take your lending out of their dealership completely and that you understand that this will cost them money. Be strong here and save money.
These unprecedented times and they call for unprecedented actions. Believe it or not, several car dealerships are receiving loans from their towns to stay in business! Car dealers are an integral part of many towns economies, a huge tax revenue source and many towns feel that it is so important to keep the dealer’s open that they are loaning their dealers town money or offering lines of credit. Let me know what you think about this!
Default loans are not just rising in the mortgage arena, auto loan defaults are also skyrocketing. According to Experian there are $25 billion in over-due auto loans. Over due auto loans of both 30 and 60 days late are up. Additionally, the credit rating of people has fallen. The number of people seeking an auto loan with prime credit is down 9%. Today banks are much more reluctant to lend money.
So if you are shopping today you need to make sure you know your credit rating. If you have good credit walk into the car dealership knowing you are in charge. If you have bad credit you are not in a good position. First make sure there are no errors on your credit history, and then do what you can to fix your credit. If you are shopping for a car with bad credit you must expect to encounter some difficulties getting an auto loan, especially if you are shopping a new car. During these tight economic times lenders are very selective about whom they give loans to. So I recommend that people with bad credit focus on inexpensive cars. Try and buy something that you can quickly pay off, this will help your monthly budget and your credit rating.
US car dealers are facing the ultimate 1-2 punch: a slumping economy that is suppressing new car demand and an uproar in the lending world that is strangling the few shoppers that are walking into their doors. You would need to go back generations to find a worse time to be selling cars in the US. It is REALLY bad.
If you are planning to go car shopping in the near future make sure your finances and credit reports are solid because without it you won’t be able to get an auto loan. The good news is if you are able to get a loan ANY car dealer will bend over backwards to sell you a car!
As Congress wrings its hands over the decision to provide in excess of $700 trillion dollars for a Wall Street bailout it is important for you, the car shopper to understand how this will affect you. The primary purpose for this bailout is to assist banks and lending institutions who are becoming very reluctant to lend money. This reluctance to lend is being felt in car dealerships across the country (and probably around the world). Many dealers are faced with the incredibly frustrating scenario of seeing many of the customers who do want to buy a car unfortunately not being able to because they can not secure an auto loan. According to an Automotive News survey, car dealers are reporting that they are having difficulty getting car loans for both people with good and bad credit.
As a car shopper I strongly encourage you to consider checking and potentially lining up a line of credit before approaching a car dealer. This can be used as a powerful bargaining tool to ensure you get the best price possible. Additionally, if there is some sub-vented financing (below market financing like 0%) coming from the manufacturer you will still have access to it. Shop smart, be careful and you can save a TON of money!
Everyone knows it’s hard to sell cars these days. Desperate times call for desperate measures so the auto manufacturers are now trying to sell cars to college students. Yes, people who would normally not qualify for a loan because they generally do not make any money are now a target audience for desperate car dealers.
I am surprised that banks are willing to give auto loans to people who have probably never worked a full-time job. Especially during this period of excessive loan defaults, but dealers and lenders are hurting so bad for sales they have created a market that didn’t exist a couple of years ago. Now, as parents are preparing their child to go off to college they need to also protect them from desperate lends and car dealers who will be all too happy to strap a college kid with a mountain of debt. Parents remember to teach your kids that just because you can qualify for the loan doesn’t mean you need to make the purchase.