Auto Loans During an Economic Downturn
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by: laurawilder
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According to TransUnion, delinquencies on auto loans in the U.S. in 2008 increased almost 18 percent in the last quarter of the year. That rate is up when compared to delinquencies on auto loans for the same time period of previous years. A report from Edmunds.com predicted that about 1.6 million cars would be repossessed in 2008, due to unpaid auto loans. The delinquency rates on auto loans are not surprising, given the recent increase in delinquency rates for credit cards and mortgage loan payments. Given the downturn in the economy, consumers in some situations are having to decide which payments they should make and which ones will have to wait. For many, auto loans are paid after bills for heating, electric and mortgages. It is not an easy choice, since most people in this country depend upon their cars to get to work and take care of everyday necessities. Public transit is not available to people in smaller cities and very few could walk or ride their bike to work. Cars are an expensive purchase, which is why many people have to take on auto loans to pay for them.
Previous generations planned, saved and used cash to purchase a car. The trend in easy financing and available credit of the past decade has made auto loans more acceptable and accessible. In many cases, someone could purchase a car with no down payment. As a result of the upheaval in the credit sector, banks have now become more risk averse and loans are more difficult to obtain. For consumers shopping for a new car, there are certainly great deals to be had, given the current state of the auto industry. The big question for consumers will be whether to purchase with cash or consider taking on auto loans.
Paying for a car with cash is the simplest option. This allows you to be debt free. You also do not have to be concerned with owing more on a loan the car is worth. You do not have to send in monthly payments. The car is yours. Preferably, you would not buy a car until you had the money to do it. But if you need a car now and are shopping for auto loans, make sure you have a handle on what the loan will cost you in the long run. Do not purchase a car whose price is beyond your current financial means. Keep in mind that you will also have to pay for licensing, registration, insurance, maintenance and repairs on the car. If the car you really want is a financial stretch for you, choose something less expensive. Do not let yourself be talked into purchasing something more expensive than your budget will allow, even if you have been approved for financing or auto loans for that amount. You are the only one responsible for your bills. And you are the only one who knows what you can afford.
Citation Car insurance --
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