Auto Loans Will Never be the Same

If there is one thing that we have learned from the credit crunch, it is that there is no easy answer to anything and that if you can’t afford it you shouldn’t get it. The auto loan industry and the mortgage industry have discovered that after years of giving people what they couldn’t afford, they are now paying the price for their leniency.

The auto loan companies got greedy wanting to sell more cars to those that could not afford them; and the public was so busy trying to keep up with the Jones’ that they took on car loans that they should never have asked for in the first place. Now you have all of these people with car loans that cannot afford them, leaving the auto companies with repossessed cars in the thousands.

Take for example Jenny Powers, who was in a car accident and needed to get a new car. The auto insurance company gave her $5,000 for her car which she had paid off. She went to the car dealership told them she had $5,000 and they started showing her $30,000 cars. Upon informing them that her credit was bad, and that her house was in foreclosure, and that she was really just looking for a cheap used car, they proceeded to show her $20,000 cars. Needless to say, Jenny left.

The auto loan industry needs to wake up and realize that these days are over. They have already removed deals like 100% financing, and paying off your trade no matter what you owe, and they are working with fewer cars than ever before to sell – but they still don’t understand that those out there that need cars are not really the ones that can afford them.

 

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