MOUNT VERNON — It goes without saying that having a car is a necessity in today’s society. But cars cost money, and current economic conditions have put a squeeze on the amount of money available to consumers. How does this affect car sales and lenders’ practices? It depends on who you ask.
For D&B Auto Sales in Fredericktown, things are not looking good.
“It’s way down right now,” said Dave Rowe. “We don’t have a lot of cars on the lot right now. We do a lot of body work, but car sales are way down.”
On the other hand, some dealers are doing well because they don’t rely on lenders’ practices. For them, the paradigm seems to work.
“It’s not wonderful for us, but it’s good,” said Rod Talbott, owner of Automotive Consultants in Centerburg. “It continues to go in this direction. We don’t have the lending that most dealers have. It’s mostly a cash business for us. We’re small and don’t need to have the banks lending us money to make it.”
Talbott will steer a customer to lending institutions for car loans, but otherwise stays away from any direct involvement in the financing process.
“We try to put the prices on the windows, and when they come in here and don’t have the ability to pay for it, we tell them when you do, come and see us,” he said. “We don’t spend any time to come up with a creative financing plan. We try to price them fair and make sure they know what they’re getting.”
Talbott says that works out for them and for the consumer.
The local money supply is still there, and most local lending institutions have held to their traditional lending practices. This means the money is still available to creditworthy consumers.
“We’re making fewer car loans because there are fewer requests coming in,” explained Paul Reede, president and chief executive officer of the Peoples Bank in Gambier. “Right now there’s a lot of fear and people are holding off on those purchases. But we really haven’t changed our lending practices toward cars or mortgages. Community banks have always taken the same approach: Know your customer and take care of their needs.”
The basic thing a bank or other lending institution looks for is, first and foremost, credit- worthiness. The bank looks at the consumer’s outstanding debts and how they have paid in the past. The next thing looked at is the consumer’s ability to pay.
“If those things are in pretty good shape, there’s no reason not to give the loan,” Reede said.
Reede also said there is a difference in what consumers are looking for.
“I think there is a trend [to buying used cars] because they are trying to get into lower payments,” he said. “Even though there are more discounts and lower financing rates the dealers are using to get product sold, consumers as still looking at the payment. If they can save $3,000 on a 1-year-old car over new, it definitely affects the payment.”
First-Knox National Bank has found the current condition of the economy has not had any real effect on its lending policies.
“It’s still business as usual,” said Jim Meyer of First-Knox. “Customers with good income that’s verifiable, there’s still plenty of money that can be lent to them.”
One interesting aspect of current economic conditions has been noted by Meyer.
“One thing that seems to be popping up is a trend for fuel efficient vehicles rather than SUVs and things like that,” he said.
Again, it depends on who one talks to. A+ Autobrokers has a different experience as far as the kind of vehicles people are buying.
“As far as business goes, it’s been a little quiet,” said Dave Hurlbut of A+ “But there’s not much difference in what people are buying. Not at all. For about two months that was the case when gas was way up. When gas was up, people panicked and sold their trucks and SUVs at the lowest point and bought smaller vehicles at the highest point. Now gas is coming down. People like what they like.”
Hurlbut said he hasn’t seen any real difference in the local lenders’ approach to making car loans. A+ works with several local financial institutions and said they seem to be making about the same number of loans as before.
“Banks have definitely tightened up lending for lower credit scores,” he said. “But anybody who has a good credit score, you can get money just like you always could. Things are good. Locally, all those banks are in good shape. They’re not hurting.”
