New surveys of American consumers are showing less appetite for car purchases and auto financing – a set of “consumer report indexes” announced May 10 reveal new financial struggles for U.S. households, and that may be affecting how and whether car buyers seek certain amounts of financing for their next 2011 car or truck transaction.
According to the Consumer Reports Sentiment Index, one element of lower car sales has to do with risk: this index identifies a spike in ‘missed payments’ on personal loans and other non-mortgage loans, up about 2% in April. Auto financing loans are a major part of personal loan volume for almost any lender, and this should have a chilling effect on decisions to purchase a new 2011 car or truck.
Another index, the Consumer Reports Retail Index, shows overall new and used auto sales down by several percent, but the Consumer Reports Employment Index provides a bright spot on the horizon with improving job numbers.
It’s important not to confuse the Consumer Reports indexes with something called the Consumer Price Index, or CPI, a tool used by planners and researchers in deciphering the overall American economy. The Consumer Reports indexes are provided by an independent non-profit called the Consumer’s Union with a less formal and smaller sample group. These numbers, though less formal, still reveal a lot about how 2011 car or truck buyers are seeking vehicle loans to drive away in a nicer set of wheels, regardless of the down economy.
So when all the numbers show that this month’s auto financing is a riskier deal to make, should you still buy a new or slightly used car and finance it? There are a few good things that buyers can do to minimize their risks. One is to seek the lowest interest rates and lowest monthly payments, to make sure that you will be able to pay on time. Another big tool for new car buyers is an ‘amnesty’ set up, offered by some manufacturers, where job loss situations allow the borrower to defer payment. Any of these can help you manage a new or used car loan to make sure that you benefit from signing on the dotted line.
