For the past many months market was suffering from credit crunch due to the intense economic pressure. Banks, lenders and financial institutions were left with fewer saving which ultimately led to less lending. Though the national prime rates (means the amount one banks charge from another) comes down and helps bankers increase their savings, they hardly pass on this saving to borrowers.

Banks have the risk of non-payment of principal amount and choose only few reliable borrowers for granting auto loan. A borrower having a good credit score, less loans/ liability and high income are generally preferred by banks and lenders during recession time. However, auto dealers offer attractive incentives to their customers by providing loans at a lower interest rate.

“It is not too difficult to get an auto loan. Auto dealers offer loans to help avoid overstocking of cars. You can easily get your favorite car for thousands below than sticker price; however the interest rates may not be as low as you believe. It’s certainly not cheap and considering the high payments plus the principal amount of the vehicle, the amount is much significantly higher than ever. But we have to stick to the moment of truth when people have less cash and have no option rather than credit”

Although market is improving now, the effects of recession will stay for a while. With inflation, high mortgage payments, high gasoline prices, high food prices, people are finding difficult to pay off their auto loan monthly payments. It has been noted that around 3% of people are not paying their monthly auto payments. The percentage must be low but the number is huge. Many are opting for vehicle downsizing to reduce their average monthly expenses”

“Instead of getting rid of your vehicle, you must try to negotiate your principal loan amount, interest rate, payment terms, etc with your lender. This procedure is called as ‘Auto Loan Modification’ where in you can save a lot of cost which is spent on high monthly car payments. With the improvement in the auto loan industry, our loan modification industry has also significantly improved. It is obviously because both are directly related to each other. The more lending happens in the auto industry, the more customers we get for modification of the loan amount”.

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