COUNTING CARS

Can one have too many cars? Well, as a used car dealer my knee jerk reaction is…, never! I mean I have around 20-30 at all times and seldom drive the same one two days in a row, it’s great! Ok, I get that I might possibly be a little tiny bit bias but still, is that something that people are concerned with? Should we be considering the risks of owning too many cars or is there even such a thing?

It’s easy to imagine that most people own 2, maybe 3 cars each, considering the variety of styles available, and the level of importance most Americans place on their automobiles. However, the peak amount of cars per household in 2006 was only about 2.05. That number correlates roughly with the economy’s highs and lows as you might expect and the recession of the late 2000’s created a bottomless pit decaying into 2010 bringing that number down to a little over 1.8. The lasting effects of this were pedestrians choosing public transportation and carpooling over driving, some ultimately relocating to cities where no personal transportation was even necessary. Some of you here in Hampton Roads may remember the “big move” to northern Virginia beginning around 2012. Also, generation Y (millennials) who as consumers showed much less interest in car ownership due to conservation concerns and affordability also helped drive the percentage of car owners down.

This all makes perfect sense and predictably, these numbers have rebounded with the economy’s upward climb. However, there are some noticeable behavioral changes in the average car buyer. Americans today have fewer light-duty vehicles, drive less, and are consuming less fuel. Hmmm, more car but less motoring over all tells me we’re onto something. We want our cars to last, we want comfort and convenience and saving money is higher than ever on our priority list. Once bitten twice shy? You could say that car enthusiasts today are justifiably more discriminating. The economy, fuel prices, and the negatives of consumption are great teachers. In addition to a greater economy, many of those Gen Y millennials are in their 30’s now. They’re getting older and at a stage in life where salaries are higher and guess what… kids are on the way! The percentage of car owning millennials has gone from 14 to over 29. The fact is we need transportation and though specific demographics are bound to hoof it and others will take trains and busses, the majority of Americans love their cars.  

So what do the studies say? The total number of cars per household falls naturally around 2, going up slightly as kids reach adulthood and prepare to leave the nest. What we also know is that heavier duty vehicles are more popular and that car owners are spending more responsibly using less fuel, and driving shorter distances. So how many cars are cool you ask? Well, look in your driveway… that’s about right 🙂

 

Sources:

Schmitz, Matt. “How many cars does the average American own?” CARS.COM CARS.com. 15 March 2017. Web. 8, 20,2018 https://www.cars.com/articles/how-many-cars-does-the-average-american-own-1420694459157/

 

Easy Financing

How to Get It

Buying a used car can be daunting. First, you have to find a car that suits all your needs and is safe, and reliable. Now comes the fun part, paying for your new car. If you’re like most people, you’ll be applying for a car loan. When you get a loan, you borrow money from a lender and pay them back over time, with interest. The amount you actually borrow is the loan principal or financed balance, plus interest. The interest rate, presented as an annual rate, is the percentage you pay back in addition to the loan principal.

How do car loans work?

Most people think that when you get a loan to buy a car the finance company lends you the money and the car is yours. In reality, however, the lender actually owns the car, and they’re just letting you drive it while you’re paying off the loan. You don’t get the title to the car until you make your final loan payment. This is why if you don’t make your payments, the lender can repossess the car and if the car is destroyed or stolen during the term of the loan, you’ll still have to pay back the loan. This is also why lenders require you to carry insurance on the car where they’re named as the lien holder. If you fail to provide proof of insurance to the lender, they will purchase insurance on your vehicle to protect their investment. Letting that happen isn’t ideal, however, as the insurance is pricey and only protects the lender, not you.

Different loans have different loan terms, or how long you have to pay the lender back. For example, if you sign up for a five-year term, you’ll pay the money back, and then own the car free and clear, after 60 months. Loans are paid back in monthly installments, and most financial institutions can set up automatic payments to ensure that an installment is not late or forgotten. Lately longer and longer loan terms have been offered to customers; some lenders even offer eight-year car loans. While such long terms can mean lower monthly payments, they can also create situations in which you owe a lot more than the car is worth. The typical auto loan for a used car is much less, than for a new car — an average of $19,329 for used cars and $30,621 for new ones.

How does your credit score affect interest rates?

No loan is the same; some people pay more interest, and some pay less. The interest rate is based on a number of factors, one of which is your credit score. Sometimes called a FICO score, though FICO is only one credit scoring method used by lenders, your credit score can be anywhere from 300 to 850. Credit scores are determined by credit bureaus based on how much debt you have, how many open accounts you have, how much credit you have been offered, whether or not your bills have been paid on time, and the length of time you’ve been using credit.

Your lender will use information from your application and credit report to determine your debt-to-income ratio, and your credit score predicts how able and likely you are to pay back the loan. If you have a lower score, lenders will assume that you’re at high risk for not paying the loan back will charge you a higher interest rate and may only extend a loan offer with a shorter term. A more substantial down payment might also be required from customers with lower scores. It’s important to know your credit score before you apply for a car loan and do your best to make sure it’s as high as it can be.

You’re entitled to free credit reports from the major credit bureaus, but you may have to pay a little extra to get your actual score. There are a few ways to improve your score if it isn’t as high as you’d prefer, like paying off old bills and paying all bills on time for 6-9 months. If you don’t have any credit card debt, closing unused cards can help raise the score. If you do have card balances, closing cards can actually hurt your credit by raising your percentage of credit utilized. You’ll also want to double check your full credit report to ensure its accuracy. For example, say someone stole your identity and opened a credit card in your name. This could affect your ability to get a car loan, or the terms of any loan offered. You need to report the fraudulent activity right away so any errors can be corrected before you apply for auto financing. Dealing with the credit bureaus takes time, so checking your score before applying for a loan is vital.

If you have a high credit score, 760 or above, you’re considered a prime loan applicant. This means you can be approved for interest rates as low as 2 or 3%. Those with lower scores are considered a riskier investment for lenders, meaning higher interest rates. Individuals in this ‘subprime’ category (a score of 580 or below) can end up paying auto loan rates that are 5 or 10 times higher than what prime consumers receive. Most people who get auto loans have a credit score around 706 and should expect to pay rates close to the 4.21% mean.

What other factors affect your loans and interest rates?

Auto loan interest rates also depend on the type of institution lending money, so choosing the right lender means lower rates. Large banks are the leading lenders for auto loans, but credit unions tend to provide customers with the lowest APRs.

The national average for auto loan interest rates in America last year was 4.21% on 60 month loans. For individual consumers, however, rates vary based on credit score, term length of the loan, age of the car being financed, which institution provided the loan, and other factors relevant to a lender’s risk in offering a loan. On the whole, the annual percentage rate (APR) for auto loans ranges from 3% to 10%.

However, the highest allowed APR varies widely among banks, with top rates ranging from as low as 6% to as high as 25%. Banks who provide higher rate loans will generally accept applicants with worse credit, while others won’t offer loans to applicants with scores below the mid-600s. Most large banks have eligibility requirements for loans, including a mileage and age maximum for cars and a dollar minimum for loans. TM Auto can provide buyers with good credit a financing interest rate as low as 2.3% (conditions/restrictions apply) on cars up to 5 years old, even if they’re out of warranty.

As mentioned previously, credit unions tend to extend loans at lower interest rates than banks. They also have more flexible payment schedules, and require lower loan minimums — or none at all, in some cases. However, credit unions tend to offer loans exclusively to their membership, which is often restricted to certain locations, professions, or social associations.

How credit unions help!

Credit unions are member-owned and operated, controlled via a volunteer board of directors, elected by the membership. The board establishes and assesses policy, sets dividend and loan rates, and may hire a management team to run the credit union. This kind of structure means that members have a safe, convenient place to save and borrow at reasonable rates from an institution whose goal is to help them, not to make a profit of of them.

Anyone who uses credit union services is also a partial owner has the right to vote on important issues, like  the election of member representatives to the board of directors. Most other financial institutions, on the other hand, are owned by stockholders after a profit. Credit unions can charge lower rates for loans — including your car loan — and pay higher dividends on savings because they’re not-for-profit. Profits aren’t paid to stockholders, but rather are returned to members as dividends or improved services.

For example, the NAE Federal Credit Union in Hampton Roads is a cooperative, not-for-profit institution built to promote frugality and provide credit to members. It also provides special low rates for those financing with TM Auto and those also willing to move their account to an NAE bank. NAE Federal Credit Union is community chartered and accepts people living and conducting business within an area covering Hampton Roads, Gloucester, Isle of Wight, James City, Mathews, and York Counties in Virginia and Currituck and Gates Counties in North Carolina.

Members can also look forward to low rate credit cards with no annual fees, membership discounts, low rate loans, federal insurance by the NCUE, and convenient hours in addition to low rates for those financing with TM Auto Wholesalers. Even more benefits of being an NAE Federal Credit Union Member include:

  •         Free Voice Response
  •         Free Online Banking
  •         Free Draft Accounts
  •         Free Debit Transactions and Card
  •         Free Bill Pay
  •         Free Payroll Deduction
  •         Free ATM transactions at our locations

 

Getting financed can be easy if you know where to go! Have questions about getting financed through TM Auto Wholesalers? Call (757) 560-4552 and ask for Mike Love. Feel free to browse TM Auto’s inventory; your car, truck or SUV may be just a phone call away!   

 

Sources:

Heaps, Russ. “5 car loan mistakes that cost you money”. Bankrate. Bankrate, LLC. 8 July 2015. Web. 24 Jan 2018. https://www.bankrate.com/loans/auto-loans/5-car-loan-mistakes-that-cost-you-money/

N.a. “Average Auto Loan Interest Rates: 2017 Facts & Figures”. ValuePenguin. ValuePenguin. N.d. Web. 23 Jan 2018.  https://www.valuepenguin.com/auto-loans/average-auto-loan-interest-rates

N.a. “FAQ”. NAE. NAE. n.d. http://www.naefcu.org/hampton-roads-credit-union/faq/

U.S. News Staff. “How to Finance a Car and Get a Car Loan”. US News & World Report. US News & World Report. 6 Oct 2016. Web. 23 Jan 2018. https://cars.usnews.com/cars-trucks/how-to-finance-a-car

Turning Over A New Leaf

Start the New Year off right with confidence and a plan! Isn’t that what we say every year? Well this year I have a couple suggestions that may help you achieve these resolutions plus, peace of mind. Financial woes and poor credit scores are two of the most common causes of stress this time of year. Whether it’s challenging credit, no credit, or the need for more credit, finances affect our lives year after year. Tm Auto can help you establish or rebuild your credit this January and avoid “Tax Season” price gouging at the same time. By making stable, monthly payments on a large purchase such as a used car, truck, or SUV, you prove to creditors that you are a trustworthy spender. Every payment you make on time and in full raises your credit score; great news for just about anyone wishing to improve these crucial three numbers. Restoring your credit by purchasing a reliable automobile that would otherwise be out of reach just might be the plan you’re looking for! We offer “Absolute Credit Approval” regardless of your credit score so you can get started on that resolution right away!

You can also save on your used car between December and mid January! Due to suppliers capitalizing on profits as tax season approaches, car prices will go up at many dealerships after the first of the year. I’m able to offer some of my best deals up to January 15th. No gouging; just the most car for your money and a stress free car-buying experience.

            Establishing good credit starts by making regular, on-time payments but there is more to “turning over a new leaf” than this. Below are some suggestions that you may find helpful in the New Year.

  1.     Budget for a Credit Card – You’re checking account is in good standing and you regularly use your debit card, but have stayed away from credit out of a fear of going over your limit. There is no need to fear credit. If you budget correctly, a credit card becomes an easy way to boost your credit rating. It’s not much at first, but if the maximum payment is made every month, your credit rating will go up accordingly.
  2.     Always Pay on Time – Paying off the maximum balance on a credit card is great, but it means nothing if payments aren’t made on time. Payment history is the most important tool in establishing your credit score, and helps you establish yourself as a trustworthy buyer!
  3.     Keep a Low balance – Credit limits vary from card to card, and it can be tempting to use close to your monthly limit. As a rule of thumb however, you should only utilize 10-30% of your credit at any one time. It’s okay to go over this occasionally, but consistently going over this self-imposed limit can indicate financial irresponsibility.

TM Auto Wholesalers specializes in “The stress free car buying experience”. A purchase from our inventory can help you establish or repair your credit while saving you cash for holiday expenses! Feel free to contact me online at mike@tmautova.com, or by phone or text at 757-560-4252. Ask for Mike and start the New Year off right!

The Big Gift

THE BIG GIFT!

Is this the year? You know… for your teen’s BIG GIFT! That long awaited iconic symbol of freedom, sovereignty, and coolness. The singular most important possession that let’s everyone, everywhere know with absolute certainty, “I’m officially grown up.” This gift of all gifts represents the next chapter in your child’s life as well as your trust in them. It is the time-honored ticket to ride, their first car!

Like all astute parents and shoppers, you have questions… lots of questions. At the top of the list may be whether to buy new, used, or to pass down the family car. Well, rest assured that new, used, big or small, it’s going to be a hit. Your decision ultimately comes down to what makes the most sense.

The obvious choice is simply to pass down the family car. It’s often paid for and thoroughly road tested. When it comes to repairs and safety, nothing provides more peace of mind than knowing your car’s service record. It’s also likely to generate lower insurance premiums. There are plenty of good reasons to pass down the family car however; there are some “Not so good reasons” too. It’s a good idea to consider modern safety features such as side-curtain airbags, blind-spot indicators, backup cameras, and forward- and rear- collision alerts which are all good for new drivers. Passing down the family car makes sense as long as it’s safe and reliable.

New cars are also a strong consideration. The most up-to-date safety features and technology often come standard. Those with a good reliability record will need few or no repairs for at least the first three years of ownership. This means peace of mind, less headaches, and little or no maintenance costs. A new car is an easy sell as long as cost is not high on your list of concerns.  

Used cars are also a great choice. Affordable (not cheap) used automobiles are often the best way to go for teens and parents shopping for a starter vehicle. Buying the newest used car possible will likely get you the most up-to-date safety features available for your money. This is very important for novice drivers. By adding a few dollars for a good reliability record, you’ll have less repair costs and greater peace of mind. Check the CARFAX before buying to see it’s history. Small sedans and hatchbacks from mainstream brands, or even better, midsized sedans are great choices for fuel economy and lower insurance premiums.

This opportunity comes but once in a lifetime folks. Buy smart, enjoy the moment, and have a wonderful holiday! Find more articles on ASK MIKE’S blog here at www.tmautova.com and please share! Feel free to call or text (757) 560-4252 and ask for Mike Love. I’ll be happy to answer your questions and assist you with purchasing your next car, truck, or SUV.