In a Struggling Economy, Putting off Your Car Purchase Could Cost you Money

It’s true. The economy is not in its best shape. Unfortunately many auto makers are staring over the brink of destruction. But the auto industry will not fail.  If you are planning on waiting to purchase you next automobile it could cost you thousands.

The reason for this is that many banks are eager to hand out loans and to make that profit. If you have a great credit history then you’re likely to find financing with 0% interest and nifty perks.

But if you have poor credit, you might not fare so well right now.

Those with poor credit scores may see higher interest rates and even rejection from auto-finance lenders. This is part of the ripple effect from the home-buying loan fiasco we saw in 2008. Banks are precautious and don’t want to make the same mistake with car loans as they did with home loans.

Since banks are getting stricter that means you have to work harder, and it means you have to work quicker too.

Buying sooner rather than later may benefit you because future modifications to the auto financing process may work against you. It’s just not known what the future will hold. Let’s keep our fingers crossed that car financing doesn’t bottom out. Protect yourself from this possibility by buying now.

Here is a snapshot of what some of the experts are saying:

• Delinquent car loans are up for those with good credit. It’s assumed that those hit by the housing crunch are struggling to make car payments too.
• Delinquent car loans for those with lower credit are up, but the numbers are not as high as they were in the 2000-2001 recession.
• A recent report from Lehman Bros. says there will be a rising number of auto loan delinquencies in the near future.

What to do if You Have Poor Credit

If you do have poor credit, there are a few things you can do. For starters, pay down your credit card bills, pay all your bills on time, and get a copy of your credit report. Review your credit history carefully and dispute any of the pings against you that don’t belong there (i.e., a credit card company says you were late on payment when you really weren’t). 

Depending on your financial situation, you could lower your auto loan interest rate by putting at least 20% down. Also, you might be able to afford a 72-month loan, but it won’t save you money in the end. Get the shortest loan possible, pay off the car as soon as you can, and keep the car for 10 years.