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Financing a Vehicle in Troubled Economic Times: Still a Reality
October 6, 2009
Consumers’ fears about the credit crunch are widespread, driven by splashy headlines and agitated reporters. Concerns about availability of credit have many wondering how they’ll finance previously planned purchases—such as a new vehicle. So should consumers who were planning on purchasing a new car or truck shy away for fear of not getting financing? Not according to one local dealership.
Though the automotive industry hasn’t been excluded from the credit crunch, and certainly the media frenzy, the story might not be as bad as some may think—especially on a local level. Says Tom Franke, Business Manager of Honda Motorwërks, a La Crosse dealer, “Many of the problems we’re seeing with people obtaining credit are on the coasts and in the large metropolitan areas. There just isn’t the reticence to loaning money in La Crosse as there is in the larger metro areas, possibly due to the small-town atmosphere that fosters trust and values.” Many La Crosse lending institutions have remained strong—and are still eager to finance automobile loans. Another viable option for obtaining credit is taking advantage of dealer financing. In fact, American Honda Financing is remaining quite strong, and their ability to finance qualifying customers has not significantly changed.
Says Franke, “It’s business as usual here at Honda Motorwërks. There’s still a lot of available cash for good credit.” And for those that have less than stellar credit? Many will likely still qualify for financing—they may just be required to put more money down than they may have in the past, or could expect to pay a slightly higher interest rate—in some cases only one percent higher.
A few tips for consumers to consider as they decide which vehicle to purchase—and how to finance it:
• Know your credit score. Obtain a copy of your free credit report a few weeks prior to filing for a loan. That way you can correct any errors on the report that may cause you to receive a higher rate.
• Consider vehicles with higher resale value and good residual value. Credit institutions may be more likely to provide credit for a vehicle that will likely keep its value better over time.
• Consider the total cost of ownership of the vehicle. Choosing a more fuel efficient vehicle to offset the cost of gasoline is a good way to save additional dollars in the long run.
• Consider dealer financing. Many dealerships offer low interest rates to qualified buyers, and are willing to work with customers to determine a rate and term for the loan that is achievable.
Though the credit crisis is very real, don’t let it be a deterrent to a new vehicle purchase. Talk to your local dealer about financing options—you may be pleasantly surprised to find out that owning a new vehicle can be a reality even in these troubled economic times.
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