Car Financing and Auto Loans

When the sub-prime mortgage crisis hit the books of most big banks and lending firms (of whatever size), a collateral casualty is the car financing industry. Many car makers saw their new car sales dwindle to a trickle with most car buyers on a waiting mode to see how the car manufacturing industry will turn out after the turmoil. It also adversely affected the car refinancing sector for used cars due to people postponing their decision to change car models. However, wise mortgage brokers are still able to entice new clients by offering innovative financing scheme or packages to make buying a car attractive.

Previously, car manufacturers ensure new car sales by financing their dealerships either directly or indirectly (through a franchise). However, the financial crisis had made credit very tight and they found they cannot continue supporting a finance scheme that does not reflect the new true cost of money (interest rates). Brokers who had an easy time before also had to scramble for new ways to survive such as offering no-down payment and bad credit financing just to get car buyers. A few of them even resorted to sleazy practices such as an inverted car financing scheme by offering prospective buyers with extremely high interest rates and then using a grossly inflated base value of the car to be sold, especially to used car financing. The easy credit availability enticed not a few buyers to dealerships.

However, there are also honest car dealers who try to give the best deals on car buyers by canvassing several lenders at once and choosing which offers lowest rates. They do this in behalf of the car buyer but still earn enough commissions. For those planning to buy a new or used car on financing, what is most important is the integrity of the dealer. When a dealer is honest, one can be sure the best deal available is offered to you and at the same time, their service is impeccable. They also guarantee that what you see is what you get and that you are not sold a clunker or a lemon.