Is Now A Good Time To Get New Vehicle Financing

June 12, 2009

Big name automakers General Motors and Chrysler have both made recent announcements concerning their moves to reduce the number of dealerships across the United States. According to estimates, GM plans to close 1,100 sites while Chrysler has said it would close 789 dealerships.

With Chrysler currently in bankruptcy proceedings and General Motors poised to declare bankruptcy, it is not hard to imagine that more dealerships will be eliminated.

So, why is it a good time to get new vehicle financing? The fact is that with Chrysler and GM dealerships closing in the near future there are some opportunities to make really good deals since many are trying to unload inventory. Selling the vehicles with manufacturer incentives such as $4,000 on 2009 models or $1,000 “loyalty” discount for those who have purchased Chrysler vehicles in the past are just two examples.

Yet, with so many incentives to buy cars now, you may begin to think that purchasing a new vehicle suddenly got too easy. This just isn’t true. You will probably find out very quickly that not every make and model will be available at sale prices. For example, larger vehicles like vans, trucks, and SUVs tend to receive the most attention, while hybrids and other more fuel-efficient vehicles may not be listed. Additionally, auto financing is undergoing some serious challenges in the current economic climate.

Lenders like Wachovia and Chase are made it more difficult for some people to obtain automotive lending for Chrysler vehicles. In fact, the loan may cover only 70% of the invoice price. Compare this figure to the 120-130% that was covered when times were good.

Other reasons to consider getting financing for new vehicle may revolve around the availability of trade-in deals. There is a very good trend favoring trade-ins that may evaporate in a matter of months. Of course, it also might help that new vehicle prices are lower than they have been in a very long time, giving your trade-in values more bang for the buck. Then there are the discounts, sometimes as much as 20 to 40%

Other deals making headway include local incentives such as 0% financing. GM is offering what it calls its GM Total Confidence package.

Even the government is offering some help. The IRS is allowing taxpayers who but a new vehicle in 2009 to deduct the sales tax up to $49,500 of the sticker price.