Automakers are desperate to lure buyers into showrooms. Despite this need, consumers with weak credit will find it difficult to obtain approval for a car loan. In fact, some car owners are handing over the keys when they can no longer make car payments. Even then, they're not completely out of the woods. Once the car is sold, the finance company files a judgment against the borrower for the balance owed after the sale of the car.
But the free market is continuously striking a balance: while auto-loan defaults have reached a 10-year high, some auction companies are seeing repossessions increase. Similar to the sub prime-loan crisis that is causing home foreclosures, auto lenders had relaxed their requirements for car buyers by stretching the buyers' loan payments for cars they couldn't afford. The financial distress is being felt by all, resulting in new car loan delinquencies.
Lenders have had to write off billions of dollars in defaulted car loans. After losing almost $8 billion over the last five quarters, GMAC (General Motor's financing arm and the country's largest auto-finance operator) received a $6 billion rescue package so that they could resume auto lending to a larger pool of car buyers at GM dealerships.
Things may look up, or down, based on your perspective. For those whose credit worthiness is squeaky clean, automakers will continue to offer rebates and deals to lure buyers. For those with poor credit, the On Time payment protection system equipped in some cars will remind them when a payment is due. A microprocessor technology is used to disable the car when payments are past due. For car dealers, this technology can be used to extend credit to a larger pool of customers, including those considered high credit risks. If you're in good credit standing, approval rates hover around 90%.
But people have been so battered by the economic crisis that they fear slipping into debt for any reason. Why purchase a new car when you don't know if you'll have a job tomorrow? The same people who are having trouble making their mortgage payments will have less money available to make their car payments. Unfortunately, auto dealers won't be able to answer whether consumers will actually spend their money or pay down their debt.
One bright spot for potential buyers is that car deals are plenty. Because GM's sales plunged to 41%, it's working hard to convince consumers to purchase a new car. Buyers will definitely see more of the zero-financing stickers or low-interest financing on some of the slower–selling cars.
To increase your chance of getting your loan approved, you can take the following steps:
- Save more in advance, so that you can increase your down payment and reduce the size of the loan.
- Check your credit scores and correct and errors on the credit reports.
- Plan to improve bad credit
Cloud Has A Silver Lining
Just as the clouds block the sun's rays, we feel that our joys or accomplishments are blocked by these difficulties. However, if you look very close at the edges of the cloud, you can see the sun shining as if to make a silver lining around the cloud. The splendor of that view is inspiring! It reminds us that an element of hope, or a consoling aspect, can be found in what appears to be an otherwise bad situation.
Each of us can recall a time in our life where we said, "if only..." For me, I used to have a mountain of them..
...if only I had gone to college, I would be a veterinarian..if only I had cared about myself, I wouldn't have blossomed to 330 lbs....if only I didn't have these stretch marks, I'd be so happy...only I had taken the other job, I wouldn't be unemployed
The truth of the matter is this...
....if I had gone to college directly after high school, I may or may not have become a veterinarian... but I would have missed the opportunity to meet my husband
...if I hadn't bloomed to 330 lbs,I may not have learned to have empathy and compassion for others. Additionally, I might not have had the opportunity to find my inner strength and determination
...if I had not had stretch marks, I may not have been blessed with the lovely young lady who I am proud to call my daughter, and my friend
...if I'd taken another job, I may or may not have been unemployed. I would, however, have missed meeting the kind gentleman that helped me learn my value
How did I learn to change my viewpoint? How did I learn to see the silver lining in every cloud? I'll share what my grandfather lovingly shared with my mother...and she caringly taught to me...
My grandfather moved to Kansas with the entrepreneurial spirit of drilling for oil. Coming from the small town of Carlisle, and being a welder, he knew little of what he would encounter. However, with much courage and the spirit of a pioneer, he and his father moved to Kansas to live their dream. He read and studied about the use of nitroglycerine and what it meant to fracture a well. Later, during the struggling days of a new business, his son asked if he could join him and his grandfather to work in the oil business. Grandpa wanted to have Buddy join him but wasn't sure if the young business would thrive enough to sufficiently support Buddy and his young family.
Buddy remained in Des Moines and secured employment driving a delivery truck for a donut shop. In a vehicle, similar to our UPS trucks of today, the driver's door was a full panel that slid into the side panel of the truck. It was during the late 1950's and seat belts were not in use. Drivers routinely drove their routes with the doors wide open to aid them in easily jumping in and out at each destination.
Grandpa received a call no parent wants to receive and was notified that his son had been killed. Someone hit the passenger side of the delivery van and Buddy had flown out the open doorway. The truck tipped over and his life ended.
Grandpa briefly allowed the words "..if only,...if only I had allowed Buddy to come to Kansas, he would still be alive" to occupy his thoughts. A while afterwards, Grandpa heard of an automobile accident on a country road in Kansas where the driver of a truck was killed. He came to the realization that he could never win the "what if" scenarios. For "if" he had told Buddy he could join him in Kansas, he "could" have been the driver that was killed on the road that day. Grandpa calmed his thoughts, threw out the "if only" language and focused on the positives of life.. the silver linings.
Grandpa chose to be happy in the fact that his son wanted to work with him and to be thankful for the years he had shared with Buddy. In addition, the lesson of the silver lining has now been passed on through four generations (soon to be five as I will be sending this to my grandchildren).
It is time to let go of the "what if's" of our lives and focus on our blessings. In doing so, we free ourselves from the torment of "what if". By developing an "attitude of gratitude" we allow our minds to embrace positive thoughts that, like a magnet, will be drawn to you. It prepares us for a mindset that Believes in the infinite possibilities of life!
Art Linkletter said, "Things turn out best for the people who make the best out of the way things turn out." Brian Tracy shared, "Develop an attitude of gratitude and give thanks for everything that happens to you, knowing that every step forward is a step toward achieving something bigger and better than your current situation."
Can we apply this lesson to our journey to a healthier lifestyle? You bet we can!
So, in the words of Mary Oliver,"Tell me, what is it you plan to do with your one wild and precious life?"
Both John Parks & Ranae Whitmore are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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