5MinuteAutoLoan.com Blog

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.

The AAA auto club says the average price of a gallon of gas in
Washington is $4.23. The average cost of a gallon of gas in Washington dipped by 12 cents since July 6^th, which is not saying much, since a gallon of gas in Washington costs 27 cents more than the national average of $3.96. Bellingham recorded the most expensive gallon of gas ($4.27 per gallon), while the cheapest was in Spokane at $4.15.

While gas prices skyrocket past $4 a gallon, consumers are engrossed with cost cutting measures and fuel efficient choices. High gas prices seem to have had a catalytic effect in putting the brakes on consumption, changing consumer behavior and driving habits, which in turn, should reduce prices.

The AAA club’s survey today found that the average price of diesel in Washington was $4.90, 8 cents less than the record on July 18. Diesel prices in Seattle were $4.24; Olympia $4.18; Vancouver $4.13; Yakima $4.23 and Tri-Cities $4.26.

The effects of high fuel prices have trickled down into consumer lifestyles; from free pizza deliveries, plunging SUV Sales, to commuting patterns. 

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.

Funding for a new program that would reduce domestic dependence on foreign oil and create jobs and technologies in the US, has received support from 71 US House members. The program would be required to lend up to $25 billion to automakers and auto parts suppliers over the next couple of months, a move that is crucial to the future of the US auto industry.

The Advanced Technology Vehicles Manufacturing Incentive Program was initiated to help car manufacturers to concur with new fuel economy standards of 35 miles per gallon by 2020. The $25 billion in loans would be limited to 30% of the cost of any plant or technology program and engineering work within the United States.

The Alliance of Automobile Manufacturers asserted that the NHTSA’s goal of raising fuel economy standards by 4.5 percent per year between 2011 and 2015 was “not technologically feasible or economically practicable”. Raising fuel economy standards would put additional pressure on an industry already reeling from dismal sales figures and economic distress, they said. The alliance said NHTSA had underestimated the costs related to improving technology.

The NHTSA has the task of implementing a law passed by Congress in 2007 that required new cars and trucks to meet a collective fuel economy average of 35 miles per gallon by 2020.

An Amortization schedule gives you a detailed break-down of each payment on a mortgage, as calculated by an amortization calculator. It is a helpful tool that will show you all the information about your loan and help you make your payments on time.

On any mortgage, every payment is apportioned between the interest as well as the principal amount of the loan. The exact amount paid up towards the principal varies each time, and the remainder goes to interest.

An amortization schedule shows you how much money is paid towards the interest, as well as how much towards the Principal balance, with each payment. When a mortgage is first taken out, a large portion of each payment is paid to interest. Over time, as the loan matures, more money goes towards paying down the principal.

Amortization schedules are arranged according to dates. The first payment is made one full payment period after taking the loan and the last payment will mop up the balance of the loan completely.

An amortization schedule breaks down your payments into interest and principal amounts, and gives you a time schedule of the dates to pay your interest, principal, and the remaining balance on principal.

The benefit of a loan amortization program is, knowing when your loan will be paid off. The more you pay, the less interest is paid; thus the loan is cleared more quickly. Making one extra payment means you automatically reduce the amount of interest you would otherwise pay.

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.

Every active service person is eligible for a military auto loan. These loans are usually customized to suit the needs of
America’s service people and their families. Military auto financing are incentives for military personnel on active duty, in appreciation of their service to the nation. These types of auto loans also come with special discounts not usually given to civilians.

A car loan for military personnel works in pretty much the same way as that of a civilian. The service person approaches a lender for a loan through their credit union or bank. Once approval is obtained, a discount is fixed, depending upon factors such as the person’s credit history.

However, it is important that service people also shop around for the best terms at many financial institutions, before concluding a deal.

Look for the best plan that matches your budget and needs. A lease may be better if your car is only going to be used minimally. Make sure that you can afford the car purchased, in the long run, and that you can make the required monthly payments, as well as the overall costs to own it.  

Students who need to commute to schools or colleges can look at options of buying a car on a student loan. Most students who live on a rather tight budget, have to be careful about getting into debt, and must weigh their options carefully before committing to an auto loan. Auto loans for college students have actually become much easier now than ever before, what with the several online and offline options available. However, while looking for your perfect car in the classifieds, it is important to plan your budget well in advance, too.

First, you should decide whether to buy a new or used vehicle. It’s no secret that it makes better financial sense for a student to buy a used car. A certified or pre-owned vehicle can save you big bucks as well as be reliable. Used cars may be cheaper than new cars, but also come with expenses like insurance, fuel and maintenance, which can add up to quite a bit. So it is important to consider these expenses along with loan payments, while calculating the cost to own a car. Most often student auto loans offered by banks, financial companies, car manufacturers and car dealers, offer cash rebates, attractive APR rates and flexible payback terms.  

Look for the most reliable and affordable vehicle that your money can buy. Do some research in online car sites to collect information on what you really want? Check the vehicle’s history and vehicle identification number (VIN) to ensure that it hasn’t suffered any serious damage through its service history. Look for rebates and cash back bonuses, zero or flexible down payments, deferred payments and zero percent financing or low interest rates, when you consider a college student loan.