5MinuteAutoLoan.com Blog

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.    

The Ohio Department of Insurance report revealed that homeowner insurance rates have picked up by 1.5%, even as auto insurance rates continued on a three-year decline of 2.6 percent in 2007.

Historically, Insurance rates paid by Ohio residents have been among the lowest in the nation. Ohio’s auto insurance rates are ranked the13th lowest in the country, according to recent figures from the National Association of Insurance Commissioners; Ohio ranked 6th for lowest homeowners insurance premiums. 

Lower premiums on auto insurance are the result of a competitive marketplace. Car insurance premiums are based on the car’s sticker price, the repair costs, overall safety record, and the risk of theft. Many insurers offer discounts for features such as daytime running lights and anti-theft devices that reduce the risk of injuries or theft.

Texas paid the highest cost of homeowners insurance ($1,372), and Oregon the lowest in 2005 ($491), according to the National Group. New Jersey residents paid the highest for auto insurance ($1,183), and North Dakota drivers paid the least ($554).

It’s not hard to get an auto finance loan, but familiarizing yourself with its implications is often a different ballgame. An auto loan is a binding agreement between a lender and a borrower. The advantage to getting an auto loan is that you don’t have to the cash in your hands, before you buy the car. The disadvantage is that the loan will attract interest over time, which results in you eventually paying much more than the actual cost of the car.

Get your Credit Report together, as any lender will need to review your creditworthiness.  Collect up money for a down payment, which is what you first pay to obtain an auto loan. The more you pay down, the less you will require as finance from the lender.

Study your finance contract carefully and scrutinize the terms and conditions, to make sure they are favorable to you. Try and bargain for a low interest rate; interest is the percentage you pay on the money you borrowed.

The principal is the amount of money given to you by the lender. Every payment you make is diverted towards paying the principal and towards interest. Find out the duration of the auto loan; remember you will have to make a commitment to pay up every month, for the entire term. Most auto loans stretch for 24, 36, 48, or 60 months.

Auto finance companies in the U.S. are switching to longer-term car loans, in an attempt to downsize their involvement in the leasing business.

Long term auto finance loans have a slower repayment of principal, as well as increase the risk of losses resulting from defaults in payments. Leasing companies in the auto finance industry also have to cushion themselves with reserve funds to make up for possible losses from these car loans.

These kinds of car loans now stretch as long as 7 years or 84 months. GM, Ford and Chrysler LLC, consider long term auto loans as a way of shedding heavy inventories. Soaring fuel prices have caused a catalytic decline in consumer’s confidence and have hit the fortunes of auto makers, who are now faced with plunging sales especially in the pickup trucks and sport-utility segments.

Long term car loans such as 72 or 84 months, can reduce monthly payments for buyers, putting them on par with payments under leasing agreements. However long term car financing heightens the risk factor of defaults, as the unpaid principal would be higher than that of a short-term loan. Auto financing companies need to factor the loss perspective into the prices charged to customers who avail such loans.

Presidential candidate, Senator Barack Obama said that he would like to see 1 million plug-in hybrid vehicles on American roads by 2015. He also offered tax credits to buyers of hybrid automobiles and outlined plans to help American auto manufacturers achieve the goal of fuel efficiency and reduced dependency on oil imports.

Speaking at Michigan’s Lansing Center, Senator Obama said that he was keen to end oil imports from the Middle East and Venezuela within 10 years and give fillip to Michigan’s domestic carmakers, by making it a hub for the future production of fuel-efficient and alternative fuel vehicles.

Obama’s proposed energy plan includes an expenditure of $150 billion over the next 10 years to meet the demand for fresh energy sources, a plan that is expected to create 5 million new jobs. The costs for the plan to raise mileage standards, provide incentives for auto companies and consumers to switch to hybrids, would be met by a proposed windfall profits tax, ending $20 billion in subsidies to oil companies.

The Illinois Senator was offering $4 billion in loans and guarantees to carmakers to develop plug-in hybrids. Consumers would get a $7,000 tax credit for buying the fuel efficient vehicles; and taxpayers a $1,000 rebate to make up for high energy prices.

A mid-July news poll revealed that voters in Michigan named high gas prices as second to the economy, in terms of important issues facing the country. Energy issues figure largely in the presidential campaign and will determine the way popular votes swing.

Microsoft Corp announced that it will provide car manufacturers with advanced services to meet demanding consumer expectations. Microsoft’s Automotive Business Unit would expand its automotive-based software products to include services as well, in order to enhance a feel-good experience while choosing a vehicle.

Flagging off these services, is Microsoft Live Search for Devices, the first of many new offerings for its automotive platforms. Live Search for Devices, can enable compatible applications for in-vehicle infotainment and can be operated across the board in Windows Automotive and Microsoft Auto.

Microsoft Corp’s technology drives Ford SYNC in North America; it is also a committed software partner for other majors in the automotive industry. Currently, the automotive industry is undergoing major challenges; hence Microsoft’s commitment to the in-vehicle software platforms comes at an appropriate time for consumers as well as manufacturers.

Microsoft’s Automotive Business Unit provides new technologies and interfaces for in-car communication and entertainment systems. The award-winning Microsoft Auto and Windows Automotive software platforms help to provide driver connectivity to a wide range of techno-wizardry such as hands-free communication, mobile devices, navigation with personalized settings and hi-fi entertainment.

FEV Inc., a global engineering services company plans to expand its tech center by another 45,000 square feet, adding 150 jobs to its American headquarters. This move comes in the light of increasing industry demand to develop engine technology at the Auburn Hills facility.

FEV provides powertrain testing services and advanced engine systems engineering. It also develops prototypes for the automotive industry and supplies advanced engine-testing equipment.

FEV’s first expansion came in August, when the company moved into a $4.3 million expansion on Luella Lane, next to its original location at 4554 Glenmeade Lane. This is FEV’s second expansion in Auburn Hills in the past 18 months, adding more employees to its existing 227, taking its numbers to a total of 350.

FEV was founded in 1985, and is the North American subsidiary of Germany-based FEV Motorentechnik GmbH. FEV’s expansion comes in the wake of other foreign automotive firms investing in the Auburn Hills area.

TransUnion, a consumer credit reporting agency, released its analysis of trends in auto financing for the first quarter of 2008. It reported that Wyoming had the lowest auto loan delinquency rate in the nation, during the first quarter. Wyoming’s rate for auto loans delinquent stood at 0.37 % (for 60days), in comparison to 0.65 % in the U.S. overall.

The report is part of a series of consumer lending sector statistics and analyses focusing on credit cards, auto loan and mortgage data with TransUnion. These findings were arrived at from TransUnion’s data base of 27 million anonymous consumer records, picked randomly. Louisiana recorded the highest auto loan delinquency rates at 1.19 percent, with Alabama following at 1.07 percent.

In June, TransUnion reported that Wyoming’s 60-day mortgage loan delinquency rate was 1.41 percent, compared to a U.S. average of 3.23 percent. TransUnion also maintained that $14,616.94 was the average auto debt per borrower in Wyoming. Nevada revealed the highest auto debt at $16,034.

Borrowers in the states of Nevada and Arizona had limited availability of home equity-based financing for auto purchases. This could probably be the reason why auto loan debts were higher in those states, explained Peter Turek, Vice President of TransUnion’s financial service group. However, he also said that states with the highest delinquency rates also showed decreases since the fourth quarter of 2007.

A contributing factor to paying off car loans could be larger income tax refunds, with consumers filing earlier than in 2007.

If you are someone looking to buy a car and can manage to get approval, you may be toying with the idea of buying a used car, as against a brand new one. A used car seems like a great idea, because you pay less. However, getting a used car loan is not as easy as it used to be with the current squeeze on credit.

The value of a used car dips every year, so lenders charge high interest rates and present you with impossible terms and conditions. Moreover, with used car loans, you could end up paying much more than your car’s actual worth. It is a tricky situation and one that needs careful consideration before signing on the dotted line.

Most people drive out of a dealership with a shiny new car after agreeing to a car loan that’s actually too expensive for them. If you are in the market for a new car, it certainly pays to shop around, by taking time to read the fine print, understand the process, know about different kinds of auto loans and be smart about comparing rates. You should also get to know the pros and cons of each kind of auto loan.

The first kind of auto loan and the most common is a loan that has a fixed interest rate. This necessarily means that your interest rate will not change over the entire period of the loan, and you will be protected from any hikes in interest rates during the term. Variable rate loan has a certain amount of risk since the interest rate can change, but usually has a lower current interest rate than a five-year fixed-rate loan. Variable-rate auto loans will be based on the prime lending rate prevailing at the time.