I’m kind of thankful for the economic crisis.
This is essentially a credit crisis that began with risky and sometimes flat-out bad home loans. The consequences of these poor banking decisions have extended all the way to Wall Street.
As bank after bank collapses, consumers are finding it increasingly difficult to snag a good deal on a home loan, even when home prices are way down.
It’s really no surprise to speculate that a similar crunch will happen in the auto industry. Banks can’t afford to take risks anymore.
I’ve bought a lot of new cars in my time, and I’ve been offered nearly every incentive that’s ever been conceived: Cash back, low financing rates, long terms, you name it. Basically, the deal was mine to dictate.
In the very near future, financing institutions will be the ones with the upper hand and will decide who gets financed. Say so long to those “no credit, no problem!” ads that have dominated our radio waves for the last decade!
Unless you have a near perfect credit rating and a sizeable income, even getting a modest car loan will be a challenge.
Here’s the new trend in car loans we’ll see very soon: higher rates, shorter terms and decreased loan amounts.
No doubt it will be much harder, if not impossible, for lower-income people with poor credit to purchase a new car. Car dealerships and auto makers are going to struggle even more than they already have.
But all this brings me to the reason I’m thankful for this economic crisis:
The only people who will be able to buy a new car will be the ones able to afford one.
What are your thoughts? How will tightening the requirements for car loans influence you?