Interest rates are slowly climbing as less-qualified buyers are accepted for new car loans. (Photo Credit: CC BY-SA/The Truth About.../Flickr)

Bloomberg reports that new car loans are becoming easier for consumers to obtain. Auto industry experts view this as an indicator that new car sales may continue to grow, something the United States hasn’t seen since “Cash for Clunkers.”

New car loans making gradual return

Ford Motor Company chief economist Ellen Hughes-Cromwick told Bloomberg that credit across the automotive industry has begun to flow more readily. But it could take a year or more before significant gains are noted. “We should see consumer credit begin to evidence some recovery,” she said, “but it is a slow go.”

Retailers see bests sales in over a year

New car retailers surveyed by the Automotive News Data Center such as Group 1 Automotive and CarMax Inc. reported that September sales of new vehicles rose significantly. The adjusted annual rate was 12.2 million, which reflects the most successful sales pace since August 2009. But there’s still ground to cover – the annual average from 2000 to 2007 was 16.8 million. A consistently high unemployment rate is largely to blame, reports the U.S. Department of Labor.

Lack of credit isn’t to blame

Peter DeLongchamps of Houston-based Group 1 Automotive told Bloomberg that new car loans are available for more interested customers than in recent months. “But for current sales levels to increase, we need additional showroom traffic.”

More subprime new car loans

According to CNW Research, the number of subprime new car loans issues was up almost 10 percent in September 2010, which reflects the highest increase in such loans since February 2008. From January through September 2010, 6.8 percent of all new vehicle sales were of the subprime variety in terms of credit, which is 5.7 percent higher than the total in 2009.

Higher interest rates mean credit is loosening

Data compiled by Edmunds.com for major automakers like Ford and GM support the idea that new car loans are moving at an elevated pace, following the recent lull. September data from Ford shows that new car buyers got a 5.23 percent average APR on new car loans, up from 5.07 the previous month. GM showed only a modest rise, from 5.23 in August to 5.25 percent APR in September, said Edmunds. The increase in average APR means that less-qualified buyers are securing loans.

Qualify for a great new car loan at Car Deal Expert

Sources:

Bloomberg

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.