The Federal Reserve is getting ready to launch a new program that should make it easier for consumers to get credit-card and auto loans — though not necessarily at lower interest rates.
The catch is that we just went to buy a car and they quoted us a 15% rate for the loan. That is unbelievable! We have been customers at this dealership for almost ten years. We bought Lori’s first car there and we got the car she drives for Anna there now. So, when we saw the rate I told them that they had to be joking. Not only that, when I said that I would pay in cash if they discounted to price to the already fallen Blue Book Value, they wouldn’t even drop it $500!!!! I looked around the room and there was only one buyer there… ME! 20 Associates did not make a sale to the one buyer in the room that night. I walked out and DID NOT buy a car.
All of a sudden, I could see the real problem with the bailouts. Money isn’t actually making it to the consumer.
Both in the Real Estate and Car industries, we have a slight problem.
1 – The people who work at the dealerships or are the agents on the properties, are having a hard time believing what is happening and are NOT passing on the properties that people wish to buy at the price they can afford it!
2 – Many dealers and banks are using funds to backstop other losses rather than helping the consumer, which you can see in the below quote from the article:
“The question is, will they keep consumer rates high and use the excess net interest income to subsidize a lot of other losses, or will they lend it out,” said Ed Grebeck, debt markets strategist for Tempus Advisors in Stamford, Conn.
The things that need to be fixed:
1 – Car companies need to get rid of tons of back stock.
2 – Their financial arms need to be passing on bailout funds to the consumer.
3 – The stock needs to drop in price with current Kelley Blue Book price.
4 – When the consumer has an advantage to buy, they will buy. This will drop the backstock and allow car manufacturers to rehire their employees.
The catch it seems is that both lenders and manufacturers want to be able to make more off the money they lend, (EVEN THOUGH THE GOV HAS SUPPLIED IT!!!!) and at the same time, leave their people unemployed as they get YESTERDAY’S prices for cars that have LOST their value to the American people.
Folks, that is just unrealistic.
I wonder when Uncle Sam is going to start strong arming these guys to get off the funds they are receiving at the tax payer’s loss and have them siphon it down to make sure car prices drop and percentage rates become decent again!
Until this happens, there will be no fix for the auto industry in America!
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