Buying a Car During the Credit Crunch

nwng

but they're probably offer a 1.9% since their vault is not as big as yota's, and honda's cars are better. So 1.9% is low enough to prod more people into their showroom.

tns1

I was in the market for a car but am waiting now until the dust settles a bit. I have excellent credit, paid off house and was preappoved at my bank @ 5.25%(big whoop). I am going to hold off for month or 2 to see what happens. I figure the dealers will be desperate to sell there inventories and you should be able to get a great deal. When I was going around to dealerships test driving, just about every car had to be jumped off due to dead battery. So, the cars had been there a while and not been cranked for a while. I have noticed cars sitting on lots for months around here. I am in South Carolina. You should be able to write your own deal pretty much. If not, they can sit on the lot until they rust away for all I care.

mattandi

Honda has had financing and lease incentive before. The "sky is falling" will be heralded when they offer a cash-to-customer rebate.

fandiguy

It must be terrible in some parts of the country. I'm in the midwest and haven't really noticed a drop in business, i guess its all region specific. The current deals on new domestics are not going to get better. Some trucks and SUV's are over $10,000 off MSRP....how much more do people want?? We're actually almost out of 2008 model year cars, and only have a few trucks left. The people that waited for the employee pricing sale to improve are now buying at several hundred to thousands more than last month because the incentives decreased.

I'm friends with several people at import stores, and they're saying sales are WAY down. I guess most people in the midwest feel the need to support domestic brands when the economy looks like its going to sh*t...even though most "imports" are actually assembled here in the states.

nwng

honda's 1.9 are usually for year end model or end of model run. I'm talking about across the board and for 2009 models as well. I doubt they will include the s2k though if they offer anything like that.

isellhondas

Why not? S-2000's aren't big sellers and we are heading into the winter months.

nwng

If I were you, I would also wait til around christmas, take out a heloc (around 4.5% or maybe less), follow the amortization schedule to pay it off in 36 months.

You walk into a dealership with cash in hand around that time, you should be able to get whatever you want. "yes, I want you to throw in a manufacturer extended warranty, 3 yrs of XM, a book of carwash coupons....."

nwng

really? at 1.9 and they're selling slow....... , then the only hurdle is how to get around the warden wife. A used miata was my goal with the brownie points I have so far, but a brand new s2k.....

derrickson

It must be terrible in some parts of the country. I'm in the midwest and haven't really noticed a drop in business, i guess its all region specific.

i definitely 2nd that! i've been pricing numerous models (cx-9, cx-7, rav-4, cr-v, forester, etc) in houston area, and am NOT seeing the same offers as elsewhere. i had to go to charlotte NC to get a price comparable to what i see on the boards here. once i had the quote, no local dealers would come even remotely close to matching, let alone bettering it. :mad:

fandiguy

Well the bailout just got approved, so we'll see how things will change over the next couple of weeks. There is an interesting story on msn about how the credit crunch is affecting some dealerships. It says the major imports (honda, toyota, etc.) are down more than 20%, but general motors is only down 16%. Seems like a lot of people are a little off with thinking its only the domestics that are hurting right now.

Here's a link to the story:
link title

Kirstie_H

A national television news network would like to speak with consumers with good credit who are having trouble getting approved for an auto loan. If you are interested in speaking to a television reporter, please respond to jwahl@edmunds.com with your daytime contact information along with a brief summary of your situation by the end of the day on Friday, October 03.

tns1

From what i have been observing is domestics are way cheaper than the "imports" of course and that may be why the figures show that. For instance they are practically giving the Chrysler mini vans away as compared to Toyota and Honda mini vans. The reason being that Toyota and Honda is much better vehicle than Chrysler. But money is so tight people are rolling the dice on the domestic to save some dough and hope it does not fall apart before they get it payed off. Just my theory.

tns1

I looked at Home equity loans, but that is a catch-22 thing. If the prime goes up, so does it. Of course if prime goes down so does it. Its a gamble. I would rather be locked into one rate the whole life of the loan. That is what got some of these people defaulting on loans, is that they went for the ARMs and it burned them big time. My motto is, get the best rate you can and lock it in.

isellhondas

Don't forget about how fast these domestics depreciate!

There go's your "savings"!

fandiguy

No one knows the pain of that more than GMAC and Chrysler financial!!! They ate a TON of money on leases, and still have a whole wave of turn ins to go. I work at a gm store, and i wouldn't even buy a new GM, unless i planned on keeping it for 6 years......if i was to buy something GM, it'd be a used '07 or '08. I've still got another year in my lease so we'll see what happends.

tns1

Hello, Mr. isellhondas. You wouldn't be a little biased on this subject would ya?
I currently own a 2000 Odyssey EX. I must say I have been a little disappointed in the Odyssey reliability. Big problems with the sliding doors, check engine light coming on and off, squeaks, rattles, etc.. I have read the horror stories of the tranny problems that have plagued the Odyssey but Thank The Lord, we have been spared that so far. But, I think I would take the Honda over the Chrysler product any day. Chrysler seems to be all style but no substance. Still Honda quality seems to be slipping a bit along with Toyota. Maybe resting on there laurels a bit?

godda9u

DTS and LaCrosse... so you 2 retirees need to go to IHOP ASAP for the early bird special? LOL

mikefm58

isellhondas. You wouldn't be a little biased on this subject would ya?

Oh he's never heard that line here on these forums, LOL.

along with Toyota

No disagreement there. There are 4 Toyotas in my family and I wish I bought stock in the company that supplies their O2 sensors, $350 a pop to replace, all shortly after the warranty expired. And my 06 Tundra had 3 bad tires on it from day one, which were replaced.

tidester

You will want to visit one of the Honda Odyssey topics to discuss the vehicle and its comparisons. This topic is for "credit crunch" issues.

tidester, host
SUVs and Smart Shopper

isellhondas

My "bias" reflects reality.

And if you think Odysseys are troublesome, comapre them to their competition.

Back to credit...

vlane

I'm interested to see people (with some decent credit) who need an auto loan and can't get one. I share the perception that things are that bad (yet) where I am, but that they must be worse elsewhere. I'm starting to wonder if everyone doesn't feel that way, which is creating the problem that supposedly already exists. Know what I mean?

henry26

Sorry - I don't know where else to go with this. It's a cautionary tale.
I leased an Audi A4. After 3 years, they came to inspect it before its return. Imagine my surprise when I was presented with A BILL FOR $2,200! It was a total of things like "$55 for hood dents" (which I still can't see) and "$250 for door handle scratch." Folks, yes, there are - after 3 years - some scratches and dings on this car. But $2,200? I polled others who have leased cars. No one ever had this happen. I took the car to a dealer - the service manager looked at the car and the report and said, "We could fix all this for $700." This is a joke. And also a ripoff.
Audi is trying to blackmail people into buying the leased car - or forking over big bucks. I talked to Audi via phone and they graciously offered me 10% off the repair price. Watch out, folks. DON'T LEASE AN AUDI...or if you do, figure in an extra 4 MONTHS of lease payments because they've got you by the shorts.

duke23

andre1969 and 1stpik :
"A RECESSION is when your neighbor loses his job...a DEPRESSION is when you lose yours. " I love that quote, GB Will Rogers.
Yah , I know we have not yet had the first declining quarter of gnp but we shall. Btw when I went to school the definition was three, but inflation you know.The market is way oversold and due for a 10-15% rally, not to say we won't make some new lows in the short term. It is butt ugly, to complete the Gallup poll survey quoted previously. 33 % believe we are in a depression, not the "r " word. 73% believe things will get worse before they get better.
I am an optimist by heart but this is a reality car dealers need to deal with. Any deal you can cut, do so and damn the profit margin. Japanese vs domestic only works during decent economic times.We'll survive but the next couple of years will suck, relatively.

tidester

I polled others who have leased cars. No one ever had this happen.

Do you think this is related to the credit crunch?

Consider posting your message in Audi A4 Lease Questions.

tidester, host
SUVs and Smart Shopper

kdhspyder

GM did a large Fleet Dump in Sept to pump up their numbers.

The Malibu and Silverado/Sierra which they've been holding off putting into the fleets were dumped. As an example the Malibu last month was 53% fleet / 47% retail. But a sale is a sale.

In addition to the Employee Pricing for All where every vehicle in the lineup was given away the Fleet Dump cleared out the old inventory. It's not a sign of strength, it's a shrewd move on GM's part to unload excess inventory at cost or lower. Note Ford and Chrysler and Toyota did not have Employee Pricing and they all took a 30% hit.

kdhspyder

I'm interested to see people (with some decent credit) who need an auto loan and can't get one. I share the perception that things are that bad (yet) where I am, but that they must be worse elsewhere. I'm starting to wonder if everyone doesn't feel that way, which is creating the problem that supposedly already exists. Know what I mean?

We'll have to see what this does for Toyota's inventory and how many actually step up to take advantage of it. I'm certain that it will apply only to the most credit worthy. But will the most credit worthy actually take advantage of it?

isellhondas

" I am an optimist by heart"

Really! You sure could have fooled me!

I'm glad you know how things are going to play out because a lot of very smart people haven't been able to figure this out!

fandiguy

I need to applaud that comment isell, that's the truth!! Too bad the consumers on here aren't in washington, the economic crisis would be solved in about 10 minutes with all their know-how!

jipster

Curious as to how Kia Store sales will be affected by the "credit crunch"? They seem to target lower income/payment buyers. Their stores in the metro Louisville area advertise almost nonstop on the radio. i.e "No credit, bad credit...if you've got a job and $99 ...you can drive away in a brand new Kia!!!"

Would seem they would lose out on a lot of the marginal credit customers they have gotten in the past... a lot more so than any other manufacturer.

corvette

GM did a large Fleet Dump in Sept to pump up their numbers.

They should have called it a Fleet Enema.

volvomax

I'm interested to see people (with some decent credit) who need an auto loan and can't get one.

Banks are tightening their requirements. If your debt to income ratio is off, or you are trying to bury too much inequity you will get turned down even w/ a good score.

Basically, banks are going back to operating like they used to. We have all gotten so used to the lax standards that we think they are normal.
Bottom line, make sure your debt to income ratio is acceptable, don't take on too much additional debt, don't try to bury a ton of inequity and have some money to put down. You'll get approved.

volvomax

Spend the $700 and get the car fixed. Send the reciepts to Audi, no more $2200 bill.

nwng

well, you're looking at a 3 yr time frame to pay it off (if you're disciplined), and you'll be getting approx prime -1 for life of loan right now, plus the interest maybe tax deductible. prime is at 5% right now and I doubt this economy will crawl out of the hole and get overheated in the next 3 years to trigger a multiple hikes in prime rate.

I always look at helocs this way: use it wisely and you'll be rewarded

fandiguy

I believe you need a certain amount of interest to qualify it as a tax deduction. I'm sure someone on here knows the exact amount.

I'd personally be a little leary about tying any loans into my home at the current time. Things are just a little unpredictable right now.

fezo

Now this all happened before the crunch really hit the front pages but we are down four dealerships (well, two are dad and two have just dropped amkes). The Mitsubishi dealership went away a couple of years ago. This year the Chrysler dealer is gone. This is about 20 miles north of here. In the same town the guy selling Buicks, Hyundai and Subaru doesn't sell Subaru anymore.

In town the Chevy/Cadillac dealer no longer sells Cadillacs.

nsbio1

I guess it is about time to start saving up more actual cash before heading to the dealer.

Even without a loan, cars in the United States are dirt-cheap.

ronin5

>>GM did a large Fleet Dump in Sept to pump up their numbers.

And how much of a fleet dump did the other boys do to pump up their numbers?

Every time I fly into LAX anymore Hertz gives me a Mazda (6, 3) or Toyota (Camry).

ronin5

>>Even without a loan, cars in the United States are dirt-cheap.

Thirty years ago typical financing term was 24-36 months- never more. There really was no leasing. Not only could people afford this, but a good number traded their cars in every 3 years once the loan was paid.

Today financing is going up to 6-7 years. This means cars are way more expensive than people's incomes compared to the past. The availabilty of cheap and easy credit allowed the prices to escalate.

With credit not so easy, and cars not so affordable, there is no choice at all but for the car prices to come more in line with people's incomes.

The carmakers don't yet realize this. Chevy and Ford think they can still introduce $35k "crossovers," and that people will pay that price.

Perhaps some automakers will go broke. They have no pricing power. The market speaketh.

fandiguy

How much exactly do you expect a auto manufacturer to drop their prices?

The cost of everything has gone up significantly....look at the prices of homes, gas, clothing, etc. The typical american life now, is totally different from what it was 30 years ago. Now days the attitude is "buy now, pay later." No one wants to wait and save or live within their means, so they over-extend themselves. Its NOW just caught up with everyone. They might lower prices a tad, but don't expect MSRP's to drop thousands and thousands of dollars.

kdhspyder

From what I've seen the $25000-$30000 vehicles are sitting and sitting and sitting. Essentially buyers are downsizing their segments to buy a less expensive smaller vehicle rather than a larger nicer vehicle....the exception being hyrids.

You're right it's next to impossible to make a $35000 Avalon or Flex into $25000 vehicle. At that point that point they are no longer what they are intended to be.
A $25000 Avalon is a Camry.
A $25000 Flex is an Escape.

Corollas sell, Civics sell, Focus' sell, Yaris' sell, Fits sell. I think that USED vehicles will make a huge comeback simply based on the asking price.

fezo

I had sticker shock just reading what the Flex prices were when they introduced it. I don't know why but it struck me right away as way overpriced. Maybe I'm wrong but that will certainly keep me from looking.

kdhspyder

The Flex kinda has to be at that price otherwise it intrudes on the Escape buying segment.

duke23

isellhondas wrote :
" " I am an optimist by heart"

Really! You sure could have fooled me!

I'm glad you know how things are going to play out because a lot of very smart people haven't been able to figure this out! "

Maybe they weren't so smart..... just a thought.
And yes, I am an optimist, we have several years of sales pain coming, which I know you don't want to hear but I am at the 5th stage and it is what it is. Please feel free to contact dukeourl15@gmail.com and I'll be glad to respond personally. I am sorry my post has upset you so, wishing does not make it all better. Out of this quagmire we shall emerge strong. I emailed my congressman three times in the last week and called four times. While I'm not sure what district you are in, perhaps you can tell me, I'll research how western Washington voted. Once again , wishing you good sales, please feel free to respond to the above email. Also fandi,I look forward to your response to the previously listed email. Btw , if you don't respond to the email that will be reported as well. Onus on you.

nsbio1

If the credit/market trouble persists, it would be time to restructure the car market in the US and move it even more towards smaller cars, as it is already the case in Europe.

Cars in the US are too big, and even if they are the same as in Europe, their engines are oftentimes larger. For example, in Europe they sell Mazda3s with 1.6 and 2.0 liter engines only (there may even be 1.4L). In the US, it is 2.0 or 2.3. Since I am currently in the US, I had to buy Mazda3 with a 2.0 engine. I would have been very happy with 1.4L, but I had no choice, unfortunately.

I am actually hoping that the big badass V6-V8s cars go to oblivion. They are a waste of money and fuel, and serve no purpose other than inducing adrenaline rush. There are other, less wasteful, ways to achieve the same sensations . There is no way anyone actually "needs" V6 in a passenger vehicle.

mikefm58

Please feel free to contact dukeourl15@gmail.com

Get ready for a deluge of SPAM.......not too smart posting your email address in an open publuc forum.

corvette

I think that USED vehicles will make a huge comeback simply based on the asking price.

The people who have to buy will gravitate towards used, but the people who don't have to buy will hold on to what they have.

I think I read somewhere that October is traditionally the worst month of the year for used vehicles. That may mean it's a good time to have a dealer pick me up something at the auction.

isellhondas

I agree that times have changed and many mistakes have been made. I even predicted this would happen.

Telling everyone tales of gloom and doom don't help however and you seem to like telling us how the sky is falling.

I don't want to email you nor do I think your emails and phone calls to your congressman will do much good.

" Out of this quagmire we shall emerge strong"

Nice, a positive comment and I agree with you!

oldfarmer50

"...serve no purpose other than inducing adrenaline rush..."

Why else would you spend 25K on an investment as bad as buying a car? Without some fun in your transportation you might as well ride the bus.

2doorpost

I watched the same vehicle (Base Siverado) drop 4k in price over the last 4 months.
When it got to where I thought it was actually worth it- I pulled the pin on the grenade and bought. As soon as I bought it, gas dropped a buck a gallon plus.
And I can live with its 20 mpg.

I can see a turnaround past all this gloom and doom.

andre1969

They are a waste of money and fuel, and serve no purpose other than inducing adrenaline rush. There are other, less wasteful, ways to achieve the same sensations

Yeah, but no car ever sent me to the free clinic afterwards. :surprise: