Posts Tagged ‘New Cars’
Top Gear presenter Jeremy Clarkson has said the government cannot ”bail out” every single ailing industry, as figures show that sales of new cars in the UK fell in November by 36.8%.
He made his remarks in a response to listeners’ questions on Radio 5 Live.
I heard that some people purchase cars out of state to avoid high sales tax here in California. Does this work or is it worth it for new or used cars? Does anyone know whats involved? Would it be worth it to even fly to another state and then drive back? Anyone have any experience in this area?
Bank car loans are regulated. This is the most important fact that you will ever take from this article. This is to say that the interest rate charged for the vehicle loan can only be so much annually and no more. This is not to say that banks will give you 100% on the value of the loan on a new or used car. Banks maintain extremely fair and precise actuarial tables and books listing the fair value of both brand new and used vehicles. They obtain the best market value and provide you financing for approximately 66% of the automobile’s cost to you, the buyer in the best cases. Their loan operations are excellent because they have the best information in the automobile industry. They have the certified blue books, which show the appraised value of every model of car made in the world. They also keep a close association with all the automobile dealers in town, throughout the state and sometimes out-of-state whenever Interstate commerce laws allow it.
Therefore your local bank has the best information on all the best bargains in used and new cars. It is certain that you won’t have to worry about getting a good deal if you have a good credit report. This insures your rating in the eyes of your bank bringing such benefits as lower interest rates and longer loans. Now this is the bright side of the coin, what I have to tell you next is the dark side of the car loan fable.
Throughout the city and state there are numerous used car sales lots. Many streets here in town are elbow to elbow with used car lots. They look attractive and their price tags seem just right. The prospective buyer should exercise extreme caution before financing a used car from any unknown automobile car lot. First, there are many used car dealers who charge outrageous interest rates on the cars they sell. They can do this because in our state, the state legislature has voted that used car dealers bear an extreme risk when financing any car from their inventory to a person with questionable credit. This is the “usury allowance” laws which have allowed bad car deals and legalized loan shark businesses to thrive throughout America. Our state isn’t the only one, where greed and avarice dwell you find similar programs. You see a car that really is the one for you.
Maybe your credit isn’t in such good shape so the bank can’t help as much as you wanted. The “Triple Nasty Car Dealership” offers you financing, free tags and sales tax on the car of your dreams. Only it becomes a nightmare quickly when you decide on a car you really can’t afford. The interest rates on your car payment far exceed what your license tag or sales tax. In fact you can be making payments of over a thousand dollars a month for a five year old vehicle. A young friend of mine, desperate for an automobile, bought a used car that she had to pay a weekly car loan payment. Her credit risk according to the car dealership, warranted a loan rate of 258%. The closing statement is this, make your car loan from a recognized bank and get a manageable rate. If you cannot finance from a bank, or a lending association carefully look into the repayment terms offered by the dealership. If they are exorbitant or too costly then don’t sign the loan papers, just walk away!
In the modern world, cars are often considered more of a necessity than a luxury. They get us to work; they get the kids to school in the morning; they enable us to visit family at the weekends. It would follow that sales of cars are a reasonable indicator of the strength of the average consumer’s finances.
A new report from the Society of Motor Manufacturers and Traders (SMMT) shows that new car registrations fell by 21% in September, compared with August’s figures.
It was the fifth consecutive month that numbers of new car registrations had gone down, and the biggest drop so far – the closest was 18.6% between July and August.
Debt problems or careful planning?
So is this a serious indicator of the trouble the economy faces, or just a sign that people are taking care over their finances?
“It’s important to remember that this is a reflection of new car sales, and not necessarily car sales as a whole,” says a spokesperson for Debt Advisers Direct.
“It may well be that as we have seen with the supermarkets, consumers are simply keeping to a tighter budget. The market for second-hand cars could benefit, or perhaps people are just keeping their existing vehicles.”
But the spokesperson commented that the shift in spending behaviour still reflected a change in consumer attitudes brought on by the credit crunch. “A major factor will be the limitation in peoples’ ability to obtain credit. Sales of new cars rely almost entirely on credit, because very few people can afford to pay the full amount up front,” she said.
“Even for those who are still able to obtain car finance, many will be concerned about the risks surrounding the economy in general, and may want to avoid credit for fear of falling into debt.
“Likewise, some of those who were able to obtain car finance at the peak of the economic boom may now be suffering for it. As prices of other things such as energy and food rise, more and more people are at risk of debt problems, and the more debts you have, the higher the risk.”
The spokesperson added that anyone who does find themselves struggling with debt should not hesitate to seek the appropriate help.
“We advise anyone worried about their debts to contact an expert debt adviser as soon as possible,” she said. “They will talk you through your situation and help to find the best debt solution for you.”
Buying a new car is likely to be one of the biggest purchases you make other than buying a house, therefore when buying a car it is important to take many issues into consideration.
The current economic climate has left consumers struggling with cash flow. Therefore it is important for consumers to make sure they consider their own situation in terms of being able to afford certain goods. Cars, being a large cost yet important in most people lives, are available to purchase either by a lump sum payment or available on finance.
“while registrations of new cars for fleet and small business users are both expected to decline, Mintel believes that the downturn will have most impact upon sales to private individuals, which are expected to drop below 1 millions units for 2008” (Mintel 2008).
This market downturn has possible implications of increasing prices from dealers who need to maximise on each sale. The future car market is not set to recover from this for a few years yet. With no growth, and inflation increasing each year, the car market could suffer.
“Mintel forecasts difficult times ahead for the value of the total car market, with growth remaining stagnant. From 2008-2013 we expect the market to grow and decline by one percent. Without the effects of inflation on motoring this equates to a drop of 10%” (Mintel 2008).
There are some who believe that buying a car is something that consumers should consider doing whilst the country is in this downturn as dealers will become more competitive to sustain sales figures. The marketplace could be seen as an attractive proposition to those who are not as affected by the credit crunch or economic downturn as some others.
“A potential slowdown in the economy, cost of fuel and road charging are some of the factors that will make it difficult for this market to sustain growth. Furthermore competition is likely to grow strong, as people become savvier and aware of prices through searching on the web” (Mintel 2008).
Buying a car on finance is therefore an attractive option for some consumers, who are able to see through the now acclaimed recession. If the payments for a car are split to small monthly manageable payments rather than one large lump sum then it is more feasible to sustain a good cash flow for most consumers through these harder times.
The economic downturn is has a large effect on the lending market. Due to current banking conditions, banks are less willing to lend finance to consumers. The implications of which for buying a car or sourcing a car on finance for consumers means it will be harder for them to obtain finance without applying for a secured loan and or those with solid credit history.
However, it is still possible to get the finance for buying a car for those with poor credit as there are some banks, more stable than others, that are able to capitalise on the poor market environment.
Consumers seem to be less interested in the notion to buy a new car. New car sales a set to decrease by 17% but buying used cars is set to rise to 14%.
Used cars that depreciate less have become a more attractive option when looking to buy a car than buying a new car.
In the long term cars will remain essential for many, and as the economy regains strength there should be no reason why this market cannot return to strong positive growth, particular as the new concerns such as being greener impact on new car designs” (Mintel 2008)