Finding Auto Loan Rates in a Recession

by passivefamilyincome

Have you looked at auto loan rates recently? If you are in the market for a new or used vehicle, you may find that it is not as easy as it once was to get funded for a automobile. My wife and I have recently started our search for a new vehicle as our current car lease is set to expire in a few weeks. I had figured that dealerships would be doing anything they possibly can to get buyers in the door with special incentives. We found that there are some deals out there for current year end models, but the inventory of these vehicles is extremely limited. Furthermore, we found several occurrences of misleading advertisements to get buyers in the door. While this is nothing new (and wasn’t a big surprise), we were disappointed that dealerships still promote these types of ads in the midst of a recession. My personal feeling is that the buyers have all the power now with what has been going on in the auto industry.

Unfortunately, for some of the dealerships we visited, the lack of deals and incentives was somewhat out of their control. Take for example our current Ford vehicle that we are leasing. I called the dealership to find out what our buyout on the vehicle would cost and to see what financing options they had. One of our options is to purchase the current leased vehicle we are driving as our next car. We know the history of the vehicle and it has less than 20,000 miles on it in 2 years. There is a lot of value in that purchase and is an option we are considering. However, when I spoke with the Ford dealership, the salesperson (who I have a lot of respect and trust for) told me that Ford Credit should not be an option for me. He said that the current rate they could offer was over 10% APR. I about fell over when he told me the rate. He also mentioned to me that we had excellent credit and that was about the best rate they could offer on a used vehicle. He suggested that we seek out our own financing if we wanted to purchase our existing vehicle. This is always a smart thing to do regardless of the economic climate. You should always shop around for the best rates and financing options available to fit your needs.

After my discussion with the Ford salesperson about the buyout option for our current vehicle, we discussed options for leasing or buying a new vehicle. I asked him what deals were available, expecting all sorts of excellent incentives and savings. To my amazement, the deals were very lean. While they had some decent rebates on some larger vehicles, there was nothing that jumped out to us as an excellent deal for a new lease. Then I asked about 0% financing options on purchasing a new vehicle. The salesperson told me that they had 0% financing options on 24 and 36 month purchases. I asked if they offered 60 month 0% financing, which would fit into our budget. He explained to me that the banks won’t give the automobile companies loans past 3 years because they are worried they will go under. Basically, all of the news that I watch on television and read on the internet about the banks and the automobile industry hit home. While I think the auto dealers would love to entice buyers with great deals, I think it is somewhat out of their control. The 0% financing on a new vehicle is a nice option, but the 36 month period is difficult for many families to fit into a budget.

The financing troubles are not just exclusive to the domestic automakers. We decided (for the first time ever) to consider buying a foreign made car. I have mixed feelings about purchasing a vehicle that isn’t from a Detroit Automaker. The top priority is to find a safe, reliable, and affordable family vehicle. If that means purchasing a foreign vehicle, then that is what we will do. We visited multiple Toyota dealerships recently and were also a little disappointed in the available deals. The foreign automakers are not in that great of shape either, so my assumption is that they would be making great deals. Once again, we found that financing has become an issue. The best rate Toyota could offer us was around 7% on a new vehicle. One of the salespersons we spoke to also told us that their rates are expected to rise even more and suggested we look outside their internal lending to outside banks for better rates.

I decided to conduct a search on the internet looking for great auto loan rates after we visited the dealerships, looking to see what we could find. The cheapest rate for a new vehicle I could find was in the high 6% range. I searched long and hard to find a better rate and looked at banks like Wachovia, BB&T, Fifth Third Bank, and Chase Bank to name a few. How can we get our economy moving again when the cheapest interest rates for a new automobile are in the upper 6% and go up over 10%. These are rates for people with very good credit. I can’t imagine what people with poor credit are being charged.

We still have some affordable options available to us for purchasing or leasing a vehicle in the short-term. However, the great deals that I was expecting were not out there. I was surprised that dealerships were not begging us to buy from them and throwing in all kinds of incentives and options. While I believe some of it is a result of poor management for many years catching up to the auto industry, I also blame the financial crunch for the lack of deals.

ref: passivefamilyincome.com/2008/12/15/finding-auto-loan-rates-in-a-recession/

Reading a Forex Quote

Total newbies to the foreign exchange market can find reading a Forex quite intimidating (even baffling) at first. In fact, this is the most common initial hurdle. The quote is brief, but it packs in a great deal of useful information. And although it doesn't make a lick of sense to a newcomer, here's a quick, simple explanation of what it means.

A Forex quote is always based on a pair of currencies, where you're simultaneously selling one currency and buying another. And there are two prices, one for selling and the other for buying (bid price and ask price). When reading a Forex quote, it might typically look like this: USD/JPY 106.52/56

The first currency is called the base currency and the other is the quote currency. The base currency value is always 1 (in this case 1 US dollar). The number in the quote tells you how many of the quote currency (Japanese yen) you can buy with one US dollar.

And that number - 106.52/56 - is a shortened version of two numbers (106.52 and 106.56). The lower number is the bid price; the other is the ask price. The bid price shows how much a dealer will buy the base currency for. The ask price shows how much a dealer is willing to sell it for.

If you saw 106.52/56 when reading a Forex quote, it would mean that you could sell US dollars and receive 106.52 yen per dollar. On the other hand, if you wanted to buy US dollars, you would have to pay 106.56 yen for each dollar.

The difference between the bid price and the ask price in a Forex quote is called the "spread," and each tiny 0.01 unit is called a "pip." In our example, the spread for our USD/JPY quote is four pips. The spread for the most commonly traded currencies is usually that small. In general, you'll do most of your trading in US dollars, Japanese yen, Great Britain pounds, Euros, Swiss francs or Australian dollars. Also please keep in mind that when the competition really heats up some spreads will be as small as one pip.

On the other hand, for less heavily traded currencies, you may run into much larger spreads. But don't think that a small spread means tiny profits (or losses). When you're trading hundreds of thousands of units, even that one pip spread can mean big money.

Let's say you're dealing with just 100 US dollars. Selling your hundred dollars for 10,652 yen and buying them for 10,656 yen only amounts to a four yen difference. But most Forex traders will be dealing with amounts of 100,000 US dollars (or many multiples). So now we know, when reading a Forex quote, that even such an unimpressive little four-pip spread amounts to considerably more (at 4,000 yen, and probably several multiples of that).

And of course, similar trades may be repeated throughout the day and the week. This means that anytime you're reading a Forex quote, you'll recognize that this tiny little spread is more important than its meager size at first suggests.

ref: forexarticlecollection.com/forex-beginner/reading-a-forex-quote.html

Forex Trading Information

FOREX — the foreign exchange (currency or forex, or FX) market is the and the most liquid financial market with the daily volume of more than $3.2 trillion. Trading on this market involves buying and selling world currencies taking the profit from the exchange rates difference. Forex trading can yield high profits, but it is also very risky. Everyone can participate in Forex trading via the Forex brokers.

ref: earnforex.com/