5MinuteAutoLoan.com Blog

GM’s Vice Chairman, Robert A. Lutz, said that car manufacturers were deserving of government backed funding to the tune of $50 billion in view of the current credit squeeze. This financial support was crucial for auto makers who needed the capital to transform and speed up the process of manufacturing fuel-efficient vehicles. Mr. Lutz was speaking at an event near Chicago where GM was exhibiting its 2009 lineup.

GM and the United Automobile Workers union are trying to persuade Congress to sanction $3.75 billion to support the $25 billion in loans authorized in 2007. The auto major is also asking for up to twice the original funding amount, on account of a sudden hike in the demand for fuel efficient cars. GM is trying to get Congress to take a decision by September, so that the money would be available in 2009. Critics have cautioned that the loans are a bailout.

Fitch publishes a variety of rating opinions, scores and other relative measures of financial or operational strength. The most common are credit ratings, but Fitch Ratings also provide specialized ratings. These ratings provide an opinion on the financial health of an organization to meet financial commitments; these ratings are used by investors to indicate the likelihood of getting a return on the money and the terms under which it was invested.

Fitch issued five upgrades and 10 downgrades in July 2008, compared with four upgrades and 40 downgrades in June. Fitch has issued 271 upgrades and 793 downgrades through July 2008, compared to 133 upgrades and 35 downgrades during July2007. The downgrades of financial guarantors led to negative ratings in 2008.The equipment lease and auto loan sectors showed positive rating activity in July 2008. On the other hand, the aircraft and small business sectors saw downgrades during this same period.

In July, Fitch affirmed 149 ratings in the student loan, auto loan, equipment loans, small business loans, new assets, structured debt, airplane loans, and dealer floor plan sectors. Fitch expects the proportion of upgrades to downgrades to come under heavy pressure from current economic concerns.

Plummeting house prices and over-leveraged borrowing are common-place scenarios in most of America’s cities. According to first-quarter data from TransUnion, a credit-reporting company, seven of the 10 most credit-delinquent cities in the U.S. exceed the national average by two or three times.

In Stockton, California, 8.87% of borrowers were 60 days behind on their loan payments in the first three months of 2008. Laredo in Texas is the top debt-burdened city for auto loan delinquencies at 2.2%. Pine Bluff in Arkansas has the most number of people behind on their credit cards, at 2.28%.

Filings for foreclosure leapt 55% in July, compared with 2007, and increased by 8% since June, according to RealtyTrac. Across the country, more than 272,000 homes received foreclosure notices this July.

Central California is under the spotlight, as the nation’s second-highest state for foreclosure rates behind Nevada, according to RealtyTrac.

Auto refinancing is one way of saving your money, and works in pretty much the same way as home refinance. Car refinancing has become a very popular trend and works like this: you pay off your present car loan with a refinancing car loan from a different company which offers a lower APR. When you refinance your old car loan, a fresh loan pays off the old loan.

When you refinance your auto loan, your monthly car loan payments get lower, and your interest rate decreases too. This makes it easier for you to pay off the balance amount on your car loan faster.

Hundreds of car owners realize that they can save a considerable amount of money by simply by refinancing their auto loans. You should refinance your auto loan during the first couple of months, because most interest payments are paid in the earlier months.

The Insurance Institute for Highway Safety named the 2009 Ford Escape as a Top Safety Pick, from a sample of 8 SUVs tested. The vehicles included the Ford Escape, Escape Hybrid, Mercury Mariner, Mazda Tribute, 2008 Mitsubishi Outlander, 2008 Nissan Rogue and 2009 Volkswagen Tiguan.

In the IIHS frontal offset crash test, the Ford Escape rated as” Good”, owing to a new seat design which improved its crashworthiness. The Insurance Institute for Highway Safety revealed that smaller SUVs were better equipped with safety measures to deal with crashes, as auto companies incorporated more standard safety items into this popular segment. All the vehicles tested were equipped with standard electronic stability control and side airbags, but the IIHS President Adrian Lund highlighted the Escape.

General Motors is offering a one-year/12,000-mile bumper-to-bumper warranty on used vehicles, in a bid to draw customers shying away from cars and trucks built in Detroit. The guarantee holds good for all 2003 model year GM Certified Used Vehicles from Buick, Chevrolet, GMC, Saturn and Pontiac sold in the Japanese-made autos record better resale values than autos made in Detroit, a considerable drawback for domestic brands.

The one-year/12,000-mile bumper-to-bumper warranty will take care of vehicle flaws apart from regular wear and tear. GM gave out a five-year, 100,000-mile limited powertrain warranty for its used vehicles in 2007; its current bumper-to-bumper warranty stretches for three months or 3,000 miles.

General Motors sold a record number of 451,000 used cars and trucks in 2007; but sales figures in 2008 for certified used-vehicles were at an all time low, due to a weak economy and shy-high gasoline prices. Most consumers, hit by the credit squeeze, have made drastic lifestyle changes to delay new vehicle purchases.

A home equity loan is basically the kind of loan in which you borrow, by using the equity in your home as security or collateral. A home that you own can turn out to be a very useful asset when you want to finance your personal goals. You can use a home equity loan to pay for the renovation of your home, settle your hospital bills or pay for a college education.

Home equity loans are of two kinds: closed end and open end. Both closed end and open end loans are secured against the value of the property and are referred to as second mortgages.

In a closed-end loan, you as borrower receive a lump sum and cannot borrow further at the time of the closing. While most closed end loans allow you to borrow up to 100% of the appraised value of the home, the maximum amount of money lent will be decided by factors such as credit history, monthly income, and the value of your home. An open end loan is a revolving credit loan, where you as a borrower can choose when and how often to borrow against your property. The lender will set a limit to the credit based on the same criteria that apply to closed-end loans.

Fundamentally your credit score shows a lender, how credit-worthy you are. As a potential borrower, the higher your credit score, the better the interest rates you are likely to be offered. Whether you buy a car or a house, if you have a higher credit score, it is taken for granted that you are a responsible person, who makes payments on time, and therefore get a better rate than the person that with a lower credit score.  

Monitoring and managing to get a good credit score maybe more important than you think. Your credit score will determine the interest rate you can pay on a home loan, a car loan, on credit cards as well as for insurance on your car, your health and your home. It can also swing things your way when you are look for a job or an apartment to rent. With poor credit you may be looked upon as someone who is not a reliable employee.

You could also fall prey to a lender who will see that you need the money and suddenly raise their rates. So you have to be able to control how much debt you have, check where your expenses and try to improve your credit score.

Auto buying or auto leasing, acquiring a car, whether new or used, is easier said than done. As a buyer or lessee you need to do a serious exercise in number crunching and then let the figures speak for themselves.

In simple terms, auto leasing is meant for people who want to just “use” a vehicle, rather than purchase or own one. When you lease, you do not own your vehicle, you can use it, but must return it at the end of the lease unless you choose to buy it. You are also responsible for any early termination charges if you choose to end the lease before its tenure.

If you lease the vehicle for your business, you can benefit from tax laws as lease payments are deductible up to 100%; fuel, maintenance and insurance are also deductible 100%. Another advantage is that you can get gap protection in case your vehicle is totaled in an accident or stolen.    

When your credit score is bad, getting an auto finance loan can turn out to be a real challenge. Lenders can take advantage of the situation and charge you high interest rates, or car dealers can make you cough up huge monthly payments. When you have high payments and interest rates staring you in the face every month, you will make your credit score even worse if you default on them.

If you really need a set of wheels, try getting a subprime auto loan. This is one way to finance a car in spite of bad credit. Subprime auto loans are meant for customers with poor credit scores.  

A Sub-prime auto loan involves the sale of an automobile to a borrower who does not qualify for normal financing because of poor credit or erratic payment history. The buyer/borrower would be first required to give the dealer/lender, a down payment in cash, upon which the dealer would finance the balance of the purchase price on the car.

Most often sub-prime auto loans are given for used cars only. A Sub-Prime Auto Loan is necessarily a short term loan, which can be paid back easily and on time. This will help re-establish a good credit rating.