Auto Loans in 30 Seconds Drive Accelerating Vehicle Sales: Cars
Feb. 7 (Bloomberg) -- Three years ago, credit was so tight that the owner of a legal firm with a $400,000 salary and a very good credit score of more than 700 couldn't get financed to buy the car he wanted from Michael Mosser's dealership.
“The world is upside-down compared to then,” said Mosser, general manager of Chevrolet and Cadillac stores in Ann Arbor, Michigan. “Today, somebody with a 500 credit score, I can get approved and in a Malibu,” which starts at $22,110.
Lenders resisted extending credit to car buyers when the mortgage market collapsed in 2008, helping push General Motors Corp. and Chrysler LLC into bankruptcy and sending U.S. sales to the lowest point in almost three decades. Amid a slow housing market, auto demand is rebounding, spurring lenders from Bank of America Corp. to Capital One Financial Corp. to approve buyers faster and at better rates to compete for a piece of an expanding market.
“Banks have had to look elsewhere for growth opportunities, and auto has been one of the nice spaces over the last couple years,” Curt Beaudouin, a bank analyst for Moody's Investors Service in New York, said in a phone interview. “The credit experience in terms of losses has been very good in recent times. It's never gotten out of hand. Right now, it's basically good for everybody in the industry.”
Hammering home the hard lessons
WITH thousands of repossessed vehicles landing up on auction floors, buying one at an auction is certainly a means of getting a car at a bargain price.
But it is not without its risks.
While you can inspect the car before an auction and check out all its paperwork, you can’t drive it or send it off for a professional check.
Plus, Consumer Protection Act (CPA) regulations allow for it to be sold with “no duty to repair”, so if the car is out of warranty, or you discover it has a problem that’s not covered by the warranty, the bargain buy could end up costing you plenty.
And be aware that while an auction may be advertised, in big letters, as a “bank repo” auction, there’s a chance that the car you’re interested in wasn’t repossessed or part of a liquidated estate – it could have come from a dealer.
