Car Loans Vs The Credit Crunch
Car loans are the way to overcome that credit crunch if you are looking for a car.
The credit crunch may have taken away the individuals consumers ability to spend large sums of money at once but alternative finance options with car loans are enabling consumers to obtain the cars they want.
That is definitely the way that some car manufacturers have read the situation anyway. A prime example of this being the new Spyker four ndash;seater SUV super car.
A 500bph fourseater SUV super car costing around pound;185000 might not be a great example of an affordable car for the average man or woman but the theory is still the same. Car manufacturers are still producing the cars they were set to produce and consumers although purchases have gone down for those not on finance are still buying the cars they want through car loans.
A car loan can be split over as many or as few months as agreed with the car loan lender. This means that monthly payments are organised with an interest rate agreed on the loan. Cars are an expensive item at the best of economic climates let alone when the country is in a recession.
The car market has received in terms of car sales but there has however been an increase in the cars purchased through financial loans to consumers; Mintel 2008
The Mintel reports fail to consider the implications the financial market has on the lenders themselves. Banks have begun to tighten the purse strings and are not willing to lend to consumers that they deem have higher risk factors when it comes to repayments. This will affect car loans as a car loan will not be given if the lender does not think that the loan will be repaid at the rate agreed.
To counter act this some lenders have increased their interest rates this has a deterrent to those who do not wish to have such a high interest loan and also this means that repayments made on loans are of a larger sum than a lower interest loan for example.
An economic downturn can be perpetuated through these increased interest rates as lenders may prefer to lend to those who can afford the higher interest but it could also harm the ability of some consumers to keep up with repayments.
Nissan 370Z Roadster
Chevrolet Camaro
Mercedes EClass Coupe
VW Passat Bluemotion 2
These are just four cars to be released early into the New Year. With companies such as Nissan Chevrolet Mercedes and VW all continuing to spend on new product development the consumer could be forgiven to think the credit crunch isnt affecting the car market.
As stated research displays there has been an effect but its down to the consumer in order to make sure that they explore the avenues such as car loans in order to ride out the credit crunch. The larger car manufacturers are looking to increase their market share in these harder times so prices should drop. Consumers could be set in a strong position to take advantage of car values.
About the writer: Visitcars
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