Unlike big banks, the leading car lender loosened its loan requirements within hours of receiving approval for its government funding. A week later, GM and Chrysler agreed to expand their participation in a program offering low-cost loans and sales incentives to 90 million credit-union members in all 50 states. GMAC now entertains car shoppers with FICO’s as low as 621.
Basically, that opens the market to about 75% of consumers. Dealer selling prices – usually about 10% below sticker in January – now are running about 15% off, industrywide.
At this writing, annual percentage rates on GMAC loans range from 0% on less-popular models like Chevrolet Trail Blazer to 5.9% for more sought-after vehicles like the Silverado Truck. Terms have lengthened and, in some cases, cash-back offers can be combined for $4,000 or more off sticker prices. But the devil is in the details.
Hypothetically, you can fetch them from auto maker Websites – such as Chrysler Financial (www.chryslerfinancial.com) , Ford Credit (www.fordcredit.com) , Toyota Financial Services (www.toyotafinancial.com) and Honda Financial Services (www.hondafinancialservices.com)
The alternative? Shop on third-party automotive Websites, where it’s easier to find impartial info and make comparisons. Edmunds.com’s new inventory feature (“Search new car listings,” in the blue box on its home page) lets you comb local lots to find just the model and appointments you want. From there, you can get price quotes, conduct simultaneous negotiations with multiple dealers, and study specific contract terms while calculators and other sources are close at hand.
Documentation, sales and other fees in the typical automobile contract bear close scrutiny, as do the creative ways that dealers apply manufacturer sales incentive. Better to nail down those details before walking into a finance manager’s office where all the calculations and recalculations can be daunting. (See: “Confession of an Auto Finance Manager” at www.edmunds.com/advice/buying/articles/125308/article.html).
Sites like Edmunds.com also link to lenders, so you can have your credit approvals and alternative dealer quotes in hand before negotiations begin. You might also want to check Edmunds.com’s several True Market Value pricing surveys (www.edmunds.com/tmv/alerts.html) that show what others paid for a given model in your area and even predict how it will hold its value once it leaves the lot.
Edmunds.com isn’t your only ‘Net resource.’ NADA Guides (www.nadaguides.com) is another longtime industry observer with much of the same functionality, but also covering classic and collectible cars, RVs, motorcycles and boats. Publisher of the NADA Appraisal Guides, the site has other useful features, such as vehicle history reports priced at $15 for starters, compared with $30 for vehicle reports on Carfax (www.carfax.com).
On the other hand, Carfax’s used-car search tool has an unusual feature: a free preliminary car history for each search result that is pretty complete and can include tantalizing tidbits. For example, one recently listed Dodge spent the first 19,643 miles of its young life in Nevada before deciding to move to California a month and 450 miles ago. That could be innocent enough or a sign of a problem.
For a truly omnibus auto resources, it’s hard to beat the auto community on AOL (http://autos.aol.com). Industry news and car blogs abound, as do lenders and car buyers sharing lessons learned. In terms of credit, AOL’s Wallet Pop (www.walletpop.com) has every calculator and personal finance resource imaginable.
If you have good credit, FirstAgain (www.firstagain.com) is a common-sense lender that will judge your credit-worthiness holistically – based on your payment history, employment and financial resources as opposed to just your FICO score. With a background in auto lending FirstAgain makes uncollateralized loans of $10,000 to $100,000, entirely over the Net, within 24 hours. Alternatively, BadCreditOffers (www.badcreditoffers.com) and BadCreditLoanServices.com are convenient Web gateways for shoppers with credit problems.
Generally, expect your average credit union (www.creditunions.org) without exposure to devalued debt securities to offer more flexible credit terms than an over-leveraged major bank. The Credit Union National Association (www.creditunion.coop/cu_locator/imdex.html) will locate a credit union in your area.
