Auto loans and the credit market

So Toyota announced its first loss today which isn't much of a surprise to me. This does however get me angry due to the fact that we're bailing out American Auto Makers. Toyota's loss clearly shows that it's not just American manufacturers who are suffering due to the current economic conditions.

The problem is that people just don't feel comfortable purchasing a big ticket item right now. I can't stand to hear that the credit market has completely dried up and that people want to buy vehicles but just can't get financing. Banks have money to loan but no one wants to borrow, i see this first hand in my line of work. I've seen financial institutions with auto loans as low as 4.25% for people with sub-prime credit and 3.75% for people with A credit. The money is right there sitting on the table but no one is there to pick it up.

Part of the problem is that people keep dwellling on these big lenders who for the most part couldn't care less about making a car loan. Institutions like WaMu and Citi make more money in business and mortgage lending which makes auto loans low priority. This can be clearly seen in the interest rates offered by these larger instituitions some as high as 7.48%. These are the companies that have been hurt by the Real Estate burst and are tightening up their standards because they got played.

My suggestion, if there is anyone actually looking to buy a car right now, is to look at your local financial institutions, your community bank and credit unions. These guys are really struggling right now and auto loans make up a significant part of their loan portfolio's. Their problem is actually about to get worse due to the drop in interest rates.

This is a summed up version on how banks work: banks make money through loans and investments, if no one is borrowing money from them then they put their money in investments. If interest rates are low they wont be getting a good return on their investments, so they'll have to lower their rates to try to make some loans.

So the bottom line is you can really get a good chunk of cash if you need it, you just have to know where to look. You may not find loans as low as 3.75% but you'll definitely be able to find a loan. This holds true for personal unsecured loans also, if you're willing to pay a 12% interest rate but hey thats way better than the 24% you're paying on your credit card.

Hope everyone followed that,

Your Boys
WallStClothing
"Be A Winner"- WSC

www.wallstclothing.com