So Ford has a great quarter! But what did the clunker program really do? From my point of view this is what happened:
1. It helped new car dealers clear their inventory, problem was the factories were not building new cars so now the dealers have no cars to sell! 2. Problem is that many of the clunkers that were destroyed were very serviceable vehicles that would have been useful to people who cannot afford a car. 3. problem, many people who owned a free and clear vehicle now have payments to make.
Does any of this sound like the mortgage crisis? Soon we will be hearing about increased repossession rates of newer model vehicles sold during the clunker program, to of course people who could not afford a new car. Remember people got $3500-$4500 of free downpayment money. this is just like people getting a mortgage with 0 or very little down payment.

Well, it has been quite some time since my last article. I am here to tell you that there is an opportunity for everyone and every company to get financing for vehicles and equipment. That being said, you may wonder about the articles that read, “There’s a credit freeze!”

Yes, the credit markets are a little bit tight, and yes, the banks are getting even tighter when it comes to loaning money, but there is always money available to finance or lease a new or used vehicle. The catch is you may not want to pay the new price of the payment.

Here are some facts:

• Lease payments have increased. Why? Because the factories and banks are no longer willing to underwrite the potential losses on vehicle residuals. (Residuals are the end-of-lease values of vehicles.)
• Finance payments have increased. Why? Because factories and banks need to recover losses for over-extended credit to both housing and consumer car credit.

Go back in time and remember years ago. What you will find is that the new prices being quoted today are still in line with the prices of yesteryear. When you lease a vehicle from a dealer today, you will find that many of the independent leasing companies have rates that are currently competitive to the manufacturer…with a lot let hassle! When you go to a small community bank or even a credit union, you will find that their lending rates for financing are even better than many dealer rates. And again, with a lot less hassle.

Also, don’t get hung up on the interest rate. A few more percentage points of interest may translate to $25 a month more, but to get the vehicle you want and get the availability of credit you need, it may be worth the cost.

Next time: How important is that credit FICO score?

Bob Doppelt is the President of Bell Auto Leasing and Anything With Wheels LLC in Palatine. Bob has a Masters in Finance and CPA.