Ally Financial will begin offering an innovative new type of auto loans on Tuesday. (Photo Credit: CC BY/Caitlin Regan/Flickr)

Ally Financial (formerly GMAC Financial Services) is preparing to originate auto loans that should please any car buyer who has suffered through an upside down loan. The Detroit Free Press reports that Ally will offer car loans in America’s five most highly populated states that will enable borrowers to sell their cars back to Ally after four years at a price that will at least cover the remaining loan balance.

Buyer’s Choice starts Tuesday

General Motors and Chrysler dealers in California, Florida, Illinois, New York and Texas will begin offering Ally Financial’s Buyer’s Choice auto loans beginning Tuesday, Nov. 1. Loan terms will range from 60 to 84 months, and borrowers will have the option of selling the car back to Ally after 48 months. If consumers believe they can get a better sale price for the car on their own, they may still exercise that option, said Tim Russi, Ally Financial’s North American executive vice president of operations.

“This tries to appeal to the consumer who really likes having an arrangement where he owns the vehicle, but still wants to know its market value when he considers replacing it,” Russi said.

New loans, more leases

Many industry experts believe that the potential loss Ally could take with this new type of car loan would force the financier to issue fewer leases. Russi countered that by setting repurchase price in advance, Buyer’s Choice will protect Ally from the problems inherent in most conventional leases.

Ally Financial’s credit rating has improved twice this year, which Standard & Poor’s notes as a good sign. This comes despite the fact that the company’s residential home mortgage arm continues to lose money. Overall, the company reported $113 million in second-quarter profit, the sixth straight profitable quarter since the financial crisis. An initial public offering is coming soon, a sign that the company is optimistic about the future.

“Ally Buyer’s Choice is a true differentiator in the market and provides great flexibility and choice for consumers,” said Russi. “Ally is committed to bringing industry-first products to market that offer consumers more choices and help dealers sell and service more vehicles.”

When Ally Financial filed for an IPO

Sources

Ally Financial Auto Financing

Detroit Free Press

PR Newswire

Are you seeing this, Standard & Poor's?

Toyota is a brand that has been synonymous with quality over the years. While they remain a high-quality automaker, the recent Toyota recall (including the little Prius braking problem) have but a bit of a damper on their financial outlook. Not only will it cost Toyota millions to perform the recalls, but Standard & Poor’s have downgraded Toyota Financial’s credit rating in light of these questions regarding vehicle quality. Will shrinking credit mean shrinking Toyota prices, and hence the need for smaller car loans?

They’re officially on “watch negative”

The AA long-term CreditWatch for Toyota and Toyota Financial has been dinged, as have those of Toyota suppliers Denso, Aisin, and Toyota Industries. Standard & Poor’s suspects that the dip in Toyota Financial’s credit will not be resolved until May 2010 at least.

The official reason given for the downgrade is “increased concern over the potential negative impact on Toyota’s business risk profile of unfolding developments related to recent quality-related issues.” Stuck accelerators, improperly designed floor mats and defective braking systems in Japan and the U.S. have a tendency to do that, no matter how much the actual risk may have been overblown. Decreased sales and a business strategy that must accommodate for massive recalls are good for the bottom line in the short term, hence the credit rating decrease.

Toyota forecasts profit after major loss in 2009

We all know 2009 was a tough year for automakers. And for some, it goes back years before that. Toyota’s conservative fiscal policy (get it, GM?) has placed them squarely on the road to recovery, so the recall only took Toyota Financial and company down by a single notch. The Prius recall hasn’t even been figured into the rating yet. Thus, Standard & Poor’s continues to watch like a rubbernecker passing a horrible traffic accident, because of course things can always get worse.

Thankfully, Car Deal Expert can put you on the road to the car of your dreams

We make it possible with our easy car loans application. Apply now and see if a Toyota or other vehicle is within reach!

(Photo Credit: http://www.flickr.com/photos/tomeppy/ / CC BY 2.0)

Related Video:

http://www.youtube.com/watch?v=5cTfqHouTgQ

When you can't pay on time, call your lender before it's too late

In the third quarter of 2009, the national 60-day auto delinquency rate (defined by TransUnion.com as the ratio of auto loan borrowers 60 or more days past due) edged up to 0.81 percent, from .80 for the same quarter in 2008. TransUnion calculates the delinquency rate based on the approximately 27 million credit files in its credit-reporting system. Car loan payments that are late by 60 days are considered a precursor to vehicle repossession, because after that point it becomes unlikely that borrowers can catch up on their loans.

More repossessions are in the forecast

The increase in car loan delinquencies is a reflection of the rising unemployment rate, as well as a seasonal trend. Job losses are an obvious cause of late payments, but it’s also common for borrowers to fall behind on all kinds of credit obligations toward the end of the year, and then use income tax returns to bring debts current in the first or second quarters of the next year. For the fourth quarter of this year, TransUnion.com forecasts that the auto delinquency rate will rise to nearly 0.9 percent, as consumers divert money to holiday spending.

Repossessions happen quickly

It’s surprising how quickly a car can be repossessed once you fall behind on payments. A lender can repossess a car without giving you advance notice and without obtaining permission to enter onto your property. So as soon as you start to have trouble making timely payments, take steps to open a line of communication with your lender.

Remember that you’re not alone

It’s hard to make ends meet today, and if you’re falling behind, re-read the first few paragraphs of this article: You are not alone. If your goal is to find a way to get current on your loan and avoid repossession, don’t let pride get in the way. Remember that your lender has plenty of other borrowers in the same boat.

Call your lender

You might be surprised at how helpful lenders can be if you bother to communicate with them rather than burying your head in the sand when money gets tight. Lenders don’t want cars, they want money. Lenders don’t relish repossessing and selling automobiles and then attempting to collect loan deficiencies from borrowers. They relish loan payments. In many cases, they will work with you to negotiate payment arrangements that will make it possible for you to keep the car. The sooner you call, the better your chances of negotiating a workable payment arrangement and the better your chances of bringing your loan current and keeping the car.

Answer the phone

For people with money problems, this can be a hard pill to swallow:  If you’re behind on payments and your lender calls, answer the phone. When you avoid calls from a lender, you leave it no choice but to repossess the car. Avoiding calls  gives your lender the impression that you are completely unconcerned about paying the debt. So if you want to keep the car and avoid having a repossession on your credit history, answer the phone and try to work something out.

Ask for what you want

It’s best to contact your lender as soon as you realize you’re going to be late with a payment. Ask for an extension of time or a late-fee waiver. Sometimes lenders will even let you skip a payment entirely if that’s what it takes you get you caught up, and tack the payment onto the end of the loan term. Your chances of getting what you want are best if you’ve been paying on the loan for a while without problems; but if you have recurring difficulties, don’t hesitate to call the lender again. Whatever your situation, an open line of communication is the best tactic.

Honor your payment arrangement

If a lender gives you extra time to pay, do everything in your power to honor the arrangement. If late-payment problems recur, your lender will be more willing to continue working with you if you honored your agreement the first time. With that in mind, when you make payment arrangements with a lender, don’t agree to a date or amount that you aren’t sure will work. If you have doubts, don’t just agree to whatever is offered in order to get off the phone. Tell the lender what will work for you and why, and ask for what you need.

Don’t panic

Technically speaking, an auto lender can repossess a vehicle the minute you’re late on a payment, but they have no motivation to do that. If you’re in communication with a lender, it’s likely that they won’t repossess until you’ve missed a few payments and it seems that you’re stalling instead of making a genuine effort to pay

Surrender the vehicle if necessary

If you’re continually behind on car loan payments and unable to catch up or stay caught up, it may be time to take a close look at your financial situation and make a tough decision. If you cannot afford the payments on the car you’re driving, it’s better to contact the lender and make arrangements to voluntarily surrender the vehicle than it is to have a tow truck show up at your home in the middle of the night.   Surrendering a vehicle is easier to explain to the next auto loan lender and less damaging to your credit report than repeated late payments culminating in repossession.
Apply Now!

Go into the dealership with a pre-approved loan and leave happy.

Online lenders usually offer lower interest rates than car dealerships. If you perform one extra step before you head to the car dealer, you could save yourself a lot of money and a lot of hassle later on. That simple extra step is to apply online for a pre-approved new car loan.

The first step in applying for a pre-approved loan only takes a few minutes. You simply provide Car Deal Expert with the information we need to find you a lender. Once Car Deal Expert finds a lender for you, you can finish the application process online.

How does Car Deal Expert get lower interest rates?

Car dealerships and Car Deal Expert go through a similar process when a customer asks for a loan. Both contact several different lending institutions to see what terms they will offer. However, the dealership usually will offer you the loan with the highest interest rate first because that will usually get the salesperson the highest commission.

However, Car Deal Expert offers you the lowest interest rate, or a choice of interest rates and loan terms, depending on your circumstances. Your lender will check your credit, then let you know how much you’re approved to borrow and at what interest rate. There’s no guesswork regarding how much you can afford to borrow because your lender will figure that out for you.

Get the new car you want, not what the dealer wants to sell

Once you agree to your loan offer, your lender will send documentation of how much you have been pre-approved for. You can choose whether to share that information with your dealer. Once you make it clear to the dealership that you will be using your online lender, not dealership financing, the salesman won’t try to push you into spending more money.

Normally, if you tell car salespeople you want to spend $15,000, they show you cars that cost $20,000. However, letting the salesperson know that your maximum price is really your maximum price will save you some time and take the pressure off. You still have the power to talk the dealer down to a lower price. You do not have to use the entire pre-approved loan amount.

Drive away the smart way

After you have chosen your car, it’s up to the dealer to draw up a bill of sale that includes details about the car and provide it to the lender. Once the lender approves, you’re free to drive away and enjoy your new car. After you leave the dealership, you are done dealing with that dealership. Simply stick to the terms of your loan agreement with your online lender.

Getting a new car loan from an online lender through Car Deal Expert can save you money with a lower interest rate. It saves you money by keeping the dealer from pressuring you into spending more money. It also makes it easier to refinance down the road. If your credit score improves as you make your car payments, you could qualify for a lower interest rate. Refinance car loans through Car Deal Expert are a snap.

Take the stress out of new car loans

We have all experienced or heard horror stories about high-pressure salespeople. Dealers want you to spend as much as possible. The higher your principal loan amount, the higher your interest rate will be.

Buying a new car is stressful enough. When you apply for a new car loan through Car Deal Expert, no one will pressure you to borrow more or spend more than you can afford. Plus, because the process is online, you have the power to accept a loan offer or decline it, no questions asked.