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Oct 1, 2008 5:03 pm US/Eastern
Tightening Credit Slows Auto Sales
PITTSBURGH (KDKA) ―
If the credit crunch on Wall Street starts to hit Main Street, one place likely to be hit first will be local car dealers.
That's because more than 90 percent of those who buy a car do so on credit -- with a car loan.
"What was getting financed six months ago is not getting financed today," says Bob Himler, owner of U.S. Auto Mart in Irwin. "It's not like it used to be, you know, it's not like it was a year or two ago."
There are plenty of good deals on his lot, says Himler, but banks are getting fussy about how much money they lend and to whom.
"The banks are looking to have more cash down on the deal and better credit like a person's time on the job, employment history, how long they've worked, their credit history, how they pay their car loans especially."
Having lost money on bad home mortgages, banks are increasingly skittish about loaning money for car and truck purchases -- and they're not the only lenders cutting back.
GMAC, Ford Motor Credit, and Chrysler Financial -- primary lenders for the big US auto makers --have tightened their lending standards as well.
Without easier credit for car loans, auto sales are bound to fall. The Wall Street Journal reports that tight credit in August may have cost the U.S. auto industry 40,000 in lost sales equal to $1 billion dollars in revenue.
Which is why -- if you can swing it, says Himler: "Get out and look at cars now. Right now, is a great time. All the dealers out there are making unbelievable deals."
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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