Although it’s hard to say how much all this carries over to the recreational vehicle arena, The Wall Street Journal indicates that car dealers, auto-finance companies and credit-market analysts are seeing “a decided spring thaw” in the auto-finance market — especially for drivers with good credit.
Today, “if you have a job, and there’s equity in the loan … that’s it,” says Ed Gorham, director of the finance department at Planet Honda, one of the biggest Honda dealers on the East Coast. In many cases, customers don’t need down payments, he says, and people with FICO credit scores as low as 400 are getting loans.
Right now, GMAC Financial Services is offering 0%-interest loans and discounted leases to help GM and Chrysler boost sluggish sales. GMAC is offering a $499 a month, 39-month lease on the Cadillac CTS with $1,000 down — or nothing down for customers already driving vehicles leased from GM. However, the penalty for driving more than 39,000 miles is 20 cents a mile.
Honda and Lexus dealers are also offering aggressive lease deals — pushing leasing to more than half of current deals.
Data compiled by Informa Research Services Inc. and J.D. Power and Associates suggest the thaw is real and widespread, the Journal’s Joseph B. White writes. For example Informa’s analysis of the rates lenders are offering to consumers in different credit tiers shows that between January 2009 and March 2010, the average rate offered to consumers with top-drawer credit — FICO scores in the range of 720 to 850 — dropped to about 5.8% from 7.1%.
Customers with middle-tier FICO scores in a range of 660-689 were being offered loans at an average rate of about 9.4% in early March, down from an average of 10.2% in January 2009, the WSJ continued. But people whose credit scores fell below the 660 level were offered loans earlier in March at average interest rates of about 13.2% — up from about 12.9% in January 2009.
After the late-2008 financial-market meltdown, getting customers with credit issues into a new car loan was hard work. Customers needed to put down a third of the car’s price or get cosigners if their credit scores weren’t top notch, Gorham observed. Now, even the consumer with a weaker credit score might get the loan as opposed to being denied, dealers report.