Published: October 13, 2008 11:31 am      

Dealers say car loans still available

CHARLESTON — Despite the economic downward spiral and credit fears, local car dealers say consumers can still obtain financing for a new vehicle.

It might be a little tougher for some people, but the same basic rules still apply.

As long as you have a good credit score, feasible rates are available.

"A couple of dealers have called me and they say it's bad, but not as bad as the media is making it out to be," said Ruth Lemmon, president of the West Virginia Automobile and Truck Dealers Association. "One of their frustrations is the lack of floor traffic. Some folks don't want to come in buying a car because they think they can't get financed. That's not necessarily the case."

Toyota just announced zero-percent financing on 11 models nationwide to entice potential buyers. General Motors is also offering zero-percent financing on many models.

Steve Moses, president of Moses Ford, said car sales have slowed down in response to the national economic breakdown.

Consumers are a bit hesitant to make a big purchase or ask for financing, Moses said.

Lenders have tightened requirements somewhat, making it slightly tougher to get a loan, he said. But it's not that painstaking. The availability and terms of a loan ultimately depend on a customer's credit rating.

CNW Marketing Research of Bandon, Ore. reports that only 64 percent of consumers applying for car loans this year have been approved. Last year, the rate was 83 percent.

Actual car sales, on the other hand, are on par with last year.

West Virginia has registered 54,114 new vehicles through September for the year, according to data from the Division of Motor Vehicles. For 2007, there were 56,014 new automobiles registered.

"I don't blame them," Moses said about consumer fears. "I think the same things listening to Washington.

"If you have tremendously bad equity or less than prime credit, it's a challenge, as always," he added. "But if you pay bills and have good credit, we have zero-percent rates."

While loans may be available, some cash-strapped Americans who've taken advantage of financing in the past aren't paying much back. A report by Experian Automotive states that auto lenders saw a 9 percent increase in loans 30 days past due in the second quarter of 2008 from last year. Nearly $25 billion in car loans are past due.

Car dealerships act as an agent between the consumer and a lending institution when negotiating a loan. The dealer collects financial data from the customer and electronically transfers it to the institution, which calculates a rate.

Moses said his business utilizes about 20 different financial companies to issue loans.

"Most of the parties are not in the sub-prime business," he said. "Their portfolios are still good."

Jed Smith, chairman and chief executive officer of Smith Company Motor Cars, said interest rates are actually lower than they were last year.

"People are just scared right now," he said. "But I haven't seen any major changes from what we've had in the past year."

Smith said now is the best time to buy a new car because of factory programs and reduced loan rates.

It is essentially a buyer's market, meaning it's also harder to sell vehicles, dealers say.

For much of the year, sport-utility vehicles and trucks have moved sluggishly off showroom floors largely due to the high price of gasoline.

Trade-in values for those vehicles have dropped, Smith said. A car that would've been worth $15,000 last year may be valued for $5,000 less today, he said.

Manufacturers including Mercedes, Jaguar and Volvo are all offering factory incentive programs, Smith said.

At Moses Ford, a buyer can qualify for up to $10,000 in rebates for an F-150 truck. The vehicle can range anywhere from $20,000 to $40,000.

"It's a buyer's market," Moses said. "Don't expect that to go on forever."

Sales of new cars, trucks and minivans in the United States dropped 27 percent in September from the same month a year earlier. Auto sales fell for an 11th straight month, the longest slide in 17 years, and visits to dealerships fell more than 50 percent in the last 10 days of September, according to CNW Marketing Research.

"To say that it's a robust environment, it isn't," Lemmon said. "But at the same time, it's not as dire as people might think."