They say everything has its time and its season, and auto loans are no different. December is traditionally the month of the year when car buyers have the most incentives and the best opportunities for deals on a new or used car. But will December, 2009, be the season and time like in years past for the auto industry and the auto consumer? Even though the economic outlook is better as we come into this holiday season, times are not what they used to be, and the auto industry as a whole is somewhat shaky regardless of recent reports of quarterly upswings.
Typically December is when car dealerships have the pressing need to get rid of excess inventory, and normally prices reflect this need to clear out old models to make room for the new models of the coming year. But inventory is lower this year because of the Cash for Clunkers program, and incentives may not be what they have been in the past. The credit crunch and unemployment rise to the double digits, also may make lenders less likely to fuel the end of year craze that we’ve come to expect from the automobile companies. Auto loans are harder to come by as more and more banks are reeling from their losses, and many of these losses are in the auto loan sectors of the banking industry.
Of course auto loans, like any consumer loans, are easiest to get, and have the best terms, for those with a FICO score around 750. For those with a lower FICO score, be prepared to have a larger down payment and pay a higher interest rate. In any season you will find offers for auto loans that are guaranteed regardless of credit score or down payment amount. But the interest amounts on these types of loans may be astronomical, and while it may seem worthwhile to pay this interest rate to get the car of your dreams or any car at all, for that matter, ultimately its best to be cautious and shop your credit terms around.
There is a time and a season for all things, unfortunately 2009 has not been the best time or season for consumer credit. Auto loans are always possible, but be cautious about agreeing to terms and payments that you can ill afford. Caution is the keyword in this economic season. After all, none of us want 2010 to be our year, or our season, or our time, for bankruptcy.