Shares of AmeriCredit Corp., which lends to car buyers with poor credit histories, fell more than 6 percent Thursday on concern about rising defaults and rating downgrades of bond insurers. Investors are worried that Ft. Worth-based AmeriCredit might have to pay higher costs for bond insurance as providers such as MBIA Inc. face potential credit-rating cuts, said Scott Valentin, an analyst for Friedman Billings Ramsey & Co. Credit losses are spreading in the banking system from mortgages into consumer and automobile loans.
Sovereign Bancorp has stopped making auto loans in the Southeast and Southwest. Capital One Financial Corp. has said the slower economy made it harder for borrowers to keep up with car payments. Shares of AmeriCredit slid 68 cents, or 6.1 percent, to $10.52, on the New York Stock Exchange.
The third M3 derivative from BMW has been unveiled and is set to hit showrooms in April, in news that could be very exciting for potential car loans customers. It might be time to sell that used BMW and splash out on the new convertible, which has a retractable hard top and a seven-speed double clutch transmission.
As an alternative to the standard six-speed option, this type of gearbox is said to offer the “highest levels” of driving performance and really give drivers a great ride. The M3 Convertible delivers 105hp per litre in its brand-new engine, with stats clocking in at zero to 62mph in 5.3 seconds. It is expected to come with a price tag of £54,655 upon its April release, giving new car buyers something to seriously consider in the preceding months.
Motorists in the UK are wasting an estimated £3.6 billion pounds a year through failing to shop around for car cover and so could be more likely to need a car loan.This equates to £120 pounds, per person, per year.
The news follows the release of new figures from online bank Egg that show that one in five motorists simply accept the renewal quote offered to them by their current insurer.”Every year, millions of motorists end up paying over the odds for their car insurance because they do not get around to shopping around for competitive cover,” said Andy Deller, director of banking and insurance at Egg”Some insurers prey upon this apathy by hiking their premiums in the knowledge that many drivers will not bother switching to another provider,” he added.Egg’s figures show that motorists saw their premiums rise by an average of six per cent a year, while 1.28 million motorists saw their premium rise 15 per cent or more. However around 5.95 million motorists - representing 20 per cent of those on the roads - accepted their renewal quote without shopping around, with 3.4 million more (11 per cent) only looking at one other quote.Of those that did not shop around more than one in three (38 per cent) said they did not have the time, did not see the point or found it too confusing looking for new cover.The remaining two thirds of people (62 per cent) said they were not shopping around as they believed their provider gave them a good deal and were loyal to them.
It is time for the Office of Fair Trading (OFT) to investigate high car prices, says the Trade and Industry select committee.The committee believes people in the UK are currently still paying too much for cars and as such the OFT should re-open its investigation into prices.
The group expressed concern that generous discounts offered to fleet buyers were not currently being offered to large retailers. It also said, compared with drivers in other European countries, British consumers are paying too much to have their cars serviced or repaired: 50 per cent more than in France and 40 per cent more than German motoristsIn a statement the all-party group announced: “In particular, many of the criteria for independent garages to achieve ‘authorised repairer’ status appear to be barriers to entry rather than driven by a genuine concern for the quality of service offered.”It added: “Neither is the quality of servicing particularly good.
Mechanics routinely miss out basic safety checks, charge for work they have not done and recommend unnecessary repairs.”As for the actual price of cars, the MPs said it saw “no reason” why fleet purchasers should benefit so much from discounts.
Buying a new car is one of the main reasons older people take out a lifetime mortgage, Norwich Union Equity Release claims.More than £1.1 billion was released from older people’s homes in 2003.With new car registrations due on September 1st, figures from Norwich show that more than a quarter (28 per cent) of people releasing equity from their home plan to spend at least some of the money on a new car. With 20 per cent of the UK population aged over 60, more older people are driving.
There are two million drivers in the UK aged over 70 and over the last 30 years, the largest increase in active driving licence holders has been among older women. There was a 600 per cent increase in female drivers over 65, and a 200 per cent increase in male drivers over 65 compared to a 29 per cent increase in both male and female drivers aged 17-59.Mark Kelly, director of Norwich Union Personal Finance, said: “Having a car is the key to independence for many people. “However, buying a new car can be a huge financial burden for older or retired people and we have found that many of our customers use a lifetime mortgage to buy a car that they will be able to enjoy for years.”
For many people, whether or not they get an auto loan or a lease will be a matter of personal preference, but for the average new car shopper there are some questions that need to be answered before they can make an informed decision. Some cite taxes as the reason they lease, others say they like to out and out own their car - again your choice, but here are the differences.The biggest monetary difference is that when you lease your payments are lower than if you get an auto loan. That’s because with an auto loan you are paying for the whole car, but with a lease you are only paying for what you use. In most cases it will be somewhere around half of what the car is selling for or a little bit less. The dealer may decide that on a $30,000 car, at the end of the three year lease the car will still be worth $19,000. That means that you will pay only $11,000 for the use of that car for those three years. Another major difference is that when you use an auto loan to get the car, when you decide to trade it in, you have the value of the car to put against the purchase of another. However, with a lease, you turn it in after your three years are up, and you are starting from scratch � with no equity to turn over. So at some point, if you don’t lease the car, you will pay off your auto loan and will own that car � but you won�t with a lease. You will have to go through the process again, deciding whether to lease or own your next car.Car leases usually ask for lower down payments than a car loan wants it can be the difference of $1,000 for a lease as compared to an auto loan which can be as high as 20% or more. Also, many times you dont even have to put down a down payment at all, but that is harder to do with a loan than with a lease especially considering the price of the car. If you are going for a higher end, they will expect some money down.
With the real estate market and interest rates on credit cards being what they are, it is no wonder that there are problems with the auto loan industry. The interest rates that are affecting everything else, are also affecting car loans, and the people who buy cars. People are looking for deals, for 0% interest, and these are the deals that are not as prolific as they once were.However, some people say there is good to come of all this economic despair and one of the people is Joseph Ficalora, New York Community Bancorp Chief. He says that all of the negative numbers that they have been seeing will quite simply end up being an unprecedented buying opportunity and he is sure that he is not the only one looking forward to that. He says that for most people this upcoming time is an opportunity to make some very good acquisitions, and people should be prepared to take advantage of that. He said banks are having a harder and harder time with people defaulting on home and auto loans, and that sub-prime lenders have seen their stocks falling over the past few weeks.He also said that it will be a huge opportunity for larger banks to swallow up smaller ones as they start folding. The bigger banks can withstand the larger losses, but for smaller banks it is just too hard for them to compete at this time.
Robert Amlot has a concern, he thinks that the majority of people who buy a car could be enjoying it more than they are, and he knows why they aren�t. He says that most people go to the dealership and look at the car that they want, they test drive it, agree on a price and buy it. So why is this a bad thing? Because most people end up leaving feeling like they are spending too much for the car even though it was the price they wanted.
Sometimes they end up spending more than they would have, other times it is the fact that the interest rate they ended up getting was too high either way they are not happy with the monthly payment that they know they are going to be responsible for - for the next 48 months. But Amlot says that there is a better way to buy a car.He says that buyers need to go to the bank or the credit union before they go to the dealership. Not only will they be able to go with cash in hand,which helps their buying power, but they will know exactly how much they can afford and what they can’t. They will also know the interest rate for their new purchase, so that when they go to buy the car, the financing part of it is already taken care of.Amlot maintains that if you know where you stand, and don’t have the dread of waiting to see what your monthly payment will be, you will have a much better time picking out the car you want. This way, you only look at cars that you can afford, and then drive one home knowing that this is yours for the next several years and it is a good thing instead of a payment that you dread.
According to Automotive News, Michigan’s credit unions have been increasing at a surprising speed, and they think that a lot of it has to do with the fact that they are offering much lower rates than the banks that the dealerships traditionally use. They have found that the interest rate on a auto loan has been running 6.14% at the credit unions, and 7.35% at the banks.They have found that the percentage of people using the credit union auto loans has increased over the past two years from 3% to 10%. The Michigan Credit Union League President David Adams says that the jump is due to two things: the aforementioned interest rate that they charge, and the selling off of loans and how they affect them.Because of the way captive lenders have been sold off, it has led to better working relationships between lenders like credit unions. They usually have a vested interest, which has a lot to do with the larger influx of car loans coming their way.
The biggest thing however is the speed at which the credit unions have been processing their loans. It is in the dealers best interest to get a loan processed as soon as possible, so that they don’t lose the deal. If a lender starts taking too long to approve a car loan, customers have a chance to think about what they are doing and many times they will simply walk away from the deal so that they can think about it some more. With credit unions processing them so fast, it has made them a major competitor with the larger banks who used to be known for the number of loans that they would process and how quickly they could do them.
CompuCredit Corp is pleased to announce that they have made two different auto loan deals in California with the assistance of the firm of Troutman Sanders. Troutman Sanders says that it was through the work of two of their partners, W. Brinkley Dickerson, Jr. and Andrea M. Farley, that the deals were a success.CompuCredit first purchased ACC Consumer Finance LLC of San Diego on February 2nd; then later that day purchased a $195 million auto loan portfolio from Patelco Credit Union of San Francisco. For both transactions, the company paid a total of $168.5 million in cash and debt. CompuCredit had disclosed the transactions in the annual report that they had filed on February 28th. The annual report was filed with the Securities and Exchange Commission. They said that without the help of their outside council and internal council the deals could not have gone off as smoothly as they did.The company used internal council David J. Maslia and Rosalind T. Drakeford to complete the acquisitions in addition to the assistance they received from Troutman Sanders.