For many of those who are planning a new or used car purchase, it seems like there’s been a flood of negative information lately, not just around the logistics of getting an auto loan, but on the larger lending market. Even with interest rates at such a historic low, and possibly due to go even lower, it seems like there’s still not enough incentives to get many American families to sign onto additional debt, especially when high unemployment is causing high job insecurity. Intuitively, it seems like for many of us, buying on credit has become an unaffordable luxury and, in general, not a very smart move.
That idea is being borne out by a new poll from major financial analyst firm Bankrate. In a September 19 announcement, Bankrate reveals the results of a study of 1000 adults living in the U. S. The study found that 40% of Americans have reduced spending within the last two months, which often includes spending on major items like vehicles. In fact, with high blue book prices for many of today’s used vehicles, the auto industry could be hit in a disproportionate way. As for the causes of this belt-tightening, Bankrate cites stock market volatility and worrying economic headlines, such as those centered around the debt implosions of European countries and the recent U.S. debt ceiling fiasco. Basically, Bankrate has assessed the “financial security” of Americans and found it wanting.
Every individual and family has to figure out if now is the right time to invest in a new or used vehicle. For those who are looking to take that step, some savvy borrowing practices can help guard against the kinds of fears Americans are thinking about when they defer spending. One of the best ones is to come up with a bigger down payment. A larger down payment decreases the amount of overall debt, lets lenders know that the borrower is serious about paying for their purchase over time, and can even reduce interest rates for some kind of lending agreements. It’s also a good idea to shop around to get the best offers from a variety of lenders, and make your decisions with all practical information in hand. In car buying during tough economic times, as rock legend Mick Jagger says, “you can’t always get what you want,” but with some attention to detail in the borrowing process, you can get auto financing terms that are less likely to make you lose sleep if the economy continues to churn in future months.