Sep 30, 2008 9:00 am US/Eastern
Bad Economy Makes Getting Car Loans Tougher
MINNEAPOLIS (CBS) ―
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This financial crisis is having a widespread impact on retirement accounts, mortgage access and now, car loans.
AP
Since the Model T first came on the scene, the automobile has always been a symbol of the American dream. But now it may become a symbol of our financial woes.
This financial crisis is having a widespread impact retirement accounts, mortgage access and now, car loans.
"Banks have tightened up. You have to make sure everything is in line," said Char Severson, finance director with Metro Motor Group.
The credit crisis is hitting home at car dealerships, like Metro Mitsubishi and Kia, where they're struggling to find loans for customers with any kind of credit troubles and stuggling to explain that new reality.
"They still probably want that new $20,000 car that they can't have. They need to probably buy a $10,000 car that they don't want," said Severson.
Customers with clean credit can still get money, but the same traits that keep conservative spenders from getting into credit trouble are also keeping them off the lots.
"If you're not going to sell as many cars as you did six months ago, you're not going to carry as much inventory as you did six months ago," said Metro Motor Group owner Ted Terp. "If the traffic is going to be down, we've got to try to make adjustments."
Surprisingly, though, there is one exception to this trend. Cash deals are apparently strong in the face of the credit crunch. Terp said more customers are writing out checks for their car purchases instead of financing.
"Hopefully things will go back to more of that, that people will pay for things in cash and pay for things when we can truly afford them, not just buying something because we expect it, or buying something because we have a sense of entitlement," suggested financial expert Nicole Middendorf, who added paying cash is a smart idea unless you can get a great interest rate.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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