Cash, Clunkers and October Auto Sales
October 12, 2009
You are driving down the road and the clunker of a car actually begins to go “clunk”. It’s time for a new auto! Now you’re berating yourself that you didn’t trade in that clunker for a newer model while the government was offering a $4,500 rebate. The cash-for-clunker program has ended but there’s good news for auto buyers anyway.
It’s not news that the American auto industry is in transition. With the sale of the Chrysler auto maker and the bankruptcy and restructuring of General Motors, there are now more foreign cars for sale than there are American made brands. Hyundai, Subaru, Toyota, Honda, and Mercedes Benz sales are dwarfing sales of Ford. Ford is the last enduring bastion of American auto makers that is clearly financially viable.
Many people considering buying a new auto are trying to decide exactly where General Motors fits into this revamped industry. The company is majority owned by the government and is much leaner than it was before bankruptcy. But it is also still struggling and is surviving on government bailout funding.
The company is now offering autos for sale with a 60 day guarantee you can turn it back in if dissatisfied for any reason. This is a bold strategy to lure new auto buyers.
If your clunker is threatening to quit, October is a good month to begin looking for a new car. Though credit markets are tight, auto loans are probably the easiest loans to get. Many automakers operate their own financing companies and are not dependent on banks to make loans.
Now here’s the good news for consumers. General Motors, Toyota and Ford have already announced plans for major marketing campaigns to start in October.
Obviously the purpose of these campaigns is to promote auto sales. The marketing campaigns are designed to get people to visit the showrooms and car lots on the belief that once they see the new cars many will trade in their clunkers or older models for the redesigned models.
Of course, some things in life never change. The goal of most automakers is to convince you to buy the most expensive car you can qualify to buy. Consumers will find Santa Fe SUVs, pricey Legacy models, redesigned Prius hybrids and rugged Ford pickups that have all proven to be popular with vehicle buyers.
The cash for clunkers was so successful in August that it depleted car and truck inventories to the point that September vehicle shoppers had difficulty finding the cars or trucks they wanted to purchase.
With the negative credit news continually appearing in the news headlines, it would seem that auto and truck sales would be minimal. But the cash for clunkers program resulted in the sale of 700,000 vehicles and automakers hope the 4th quarter will prove that markets are starting the long road to recovery.
If you decide it is time to buy a new vehicle, there is credit available for those who qualify even in these tough economic conditions. And of those who qualify, the ones with the best credit will get the best interest rates and terms. But there are some things people will find different in the auto marketplace today when trying to get a loan.
- Bigger down payment requirements
- Higher interest rates on auto loans
- Shorter auto loan terms
- Closer inspection of credit status
In general the new credit rules will make it possible for people to continue to buy cars and trucks but with stricter limits and higher out-of-pocket costs.
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