5MinuteAutoLoan.com Blog

Consumers with auto loans are finding it increasingly difficult to make payments, as the nations’ economic slowdown hits their credit availability. As a result, auto loan delinquencies are badly affecting lending companies.

According to a study conducted by Experian Automotive, auto loans amounting to nearly $25 billion are long overdue, with very little signs of pay-back capability among customers. Compared to 2007, auto financiers reported a 9% hike in loans of 30 days past due, and an 11% increase in 60 days past due. A marked decrease in the creditworthiness of people with outstanding payments, paints a dismal picture of the economic slowdown that American citizens are facing.

Lending companies now have a longer wait to get their loans repaid and have to stay afloat while they try to recover their money. According to Experian, 64 million auto loans worth $795 billion were outstanding in this year’s second quarter. Overall, 4.4 million loans were generated in the second quarter of 2008, compared to 5.1 million in 2007.

Scott Waldron, president of Experian Automotive, said that even a slight increase in delinquent loans, cripples the industry, accounting for hundreds of millions of dollars in unpaid debt. As lenders tighten their loan criteria, consumers have a tough time repaying loans, as there is a squeeze on credit as well.

Congress could help save billions of dollars for automakers in Detroit, by approving a $25-billion auto loan package. With two weeks to go before the elections, fierce lobbying is going on by automakers and Michigan lawmakers, who want to see it through. The auto loan could speed up automakers efforts at retooling their factories to produce hybrids and other “green” vehicles.

Congress approved the $25 billion program in 2007 in an effort to help reduce U.S. demand for oil, but did not provide the $3.75 billion that the plan was estimated to cost. The plan was put forward to help auto manufacturers to meet 35 mpg fuel economy standards by 2020. But according to government estimates, Detroit would require $30.5 billion just to meet the targets for 2015.

The auto loan package was estimated to pay for up to 30% of the costs for factory retooling, according to last year’s energy law. But it was stipulated that cars or trucks built at the retooled factory would have to top their competitors’ fuel economy by at least 25%. While automakers have the support of Democrats and some Republicans, the Bush administration has not yet approved the auto loan package. “Green” groups including the Union of Concerned Scientists and the Sierra Club oppose the plan, and demand tougher fuel economy standards for automakers.

Car insurance providers have launched policies that exclusively target the ‘green market’, comprising of drivers who want an eco-friendly insurance product.

Most often these insurers offer green incentives or ‘carbon offsetting’ schemes, which means that a percentage of the price of the insurance will go towards carbon offsetting projects. Others are prepared to offset 100% of your green vehicle’s emissions.

A carbon offset is “a financial instrument which represents a reduction in greenhouse gas emissions”. One carbon offset represents the reduction of one metric ton of carbon dioxide, or other greenhouse gases. If you have an existing car insurance policy, contact your insurer to check if they have environmental incentives. A good place to shop for green car insurance is online. Browsing around will give you a lot of information about the level of coverage you need and the best deal you can get.

If you’re looking for a car finance loan, but are not sure where to get one, do a little homework to find out about the various sources for car finance loans.

A car loan is available at car yards, lending institutions such as banks, car finance companies and Internet car finance companies. It is in your own best interests to find the best loan available on the market. A bank can give you car finance, but the car loan market is very competitive, and you are a valuable customer, so keep all your options open. A bank may put down tougher conditions than a car finance company, before giving you a loan.

The two main ways that your car finance loan can be obtained are known as direct and indirect finance.  Direct loans are given by a single lender, and tend to be more expensive than indirect loans because direct lenders are at more risk from default. Indirect loans come from a lending company and are flexible, because the risk to the lender is less.

You can save a lot of money by shopping for the best auto loan. Narrow down your focus to some key features and check out how the loans compare with one another in terms of total up-front fees and charges; annual percentage rate (APR), total cost of the loan, prepayment privileges and early-discharge penalties.

Rick Wagoner, Chairman of General Motors Corporation will participate in a Senate Energy Summit on September 12th, to push Congress into backing a $50 billion federal loan to Detroit’s Big Three automakers.

Democrats and Republicans have been at loggerheads over rising energy prices and how to relieve them. The energy summit, scheduled for Sept. 12, was initiated by group of senators hoping to break a deadlock over loans authorized by Congress in last December’s energy bill but not funded. The $50 billion federal loan was meant to retool plants to build advanced technology vehicles.

A $7.5 billion energy bill for automakers, parts suppliers and consumer incentives was unveiled in July, by a group of senators known as the Gang of 10. The bill has now garnered the support of six other senators who moved the plan for an energy summit.

The first thing that comes up to your mind when you decide to buy a car is – Do I have that much money? If you can afford it fully, there’s no problem. Otherwise, it is time for you to think about your finances! The point here is to get a lower car loan rate quote which makes driving your car a more enjoyable experience.

While you are planning to buy a car, research on the car loans available in your city. But before applying for the loans, take a look at your credit ratings. If you one among those with a bad credit rating, it may be difficult! Yes, a bad credit rating will result HIGH interest rates and low amount approvals. So you have to see a company that offers poor credit auto loans.

The next thing is the monthly payment. Roughly 20 percent of your net income can be used for a car payment. Plan your expenses and be at least sure to reserve this much percentage of your income for the repayment of the loan.  These are just a few tips, once you plan and plunge into action, you can get many ideas like this! All the best!

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.

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.