February 3, 2009

January Car Sales Worst in 27 Years

Sales of Ford, GM, and Chrysler were all down more than 40% in January compared to the same time last year. Volvo and Isuzu sales were down a whopping 60%. Toyota and Honda fared a bit better with sales down around 30%. Bottom line: This is horrible for car dealers, great for car buyers. This is the worst sales have been since August 1982. It's even worse when you factor in population growth.

When car sales are down, dealers get desperate. With sales at their lowest in 3 decades, deals are gonna be everywhere. Look for more and more incentives coming down the road from both manufacturers and dealers.

Car Buyers with Bad Credit Finding it Impossible to Get Loans

The credit crunch is causing huge problems when it comes to getting a car loan. Historically, 90% of buyers with good credit scores, decent jobs, and adequate down payment were able to get loans. Now that figure is down to around 60%.

For those with bad credit (called sub-prime), loan approval rates used to be 60%. Now they're closer to 15%. This makes it almost impossible for people with bad credit to get loans. Car buyers with credit scores of less than 700 are considered sub-prime. To check your credit score, use FreeCreditReport.com

GM May Shut Down Hummer, Saturn, and Saab Brands

When GM received a government bailout, part of the deal was to submit a detailed plan proving their viability and what they were going to do about their losing brands.

Now that plan must be submitted before the end of the month and GM still has no idea what they're going to do with Hummer, Saturn, and Saab. It's possible they will risk dealer lawsuits and just discontinue these brands.

If that's the case, your warranty will still be honored if you happen to own one of these cars. But there are definitely disadvantages to owning a discontinued brand such as lower resale values. If you're considering one of these vehicles, it's best to hold off until after GM determines what they're going to do. We'll keep updating you on this situation as it develops.

Car Buyers Get Stiffed by Closing Dealerships

Experts predict 2,500 dealerships will go out of business in 2009. If you have a trade-in, you need to be careful because if you do business with a dealership that closes, you could get stiffed.

Here's what you have to watch out for: If you have a trade-in and still owe money on that car (this applies to 25% of all car buyers), dealers will promise to pay off the outstanding loan after you do the deal. The car buyer goes home happy with their new car thinking their old loan has been paid off. But what's happening is many dealers that go out of business fail to pay the loan. Lenders then go after the car buyer since the loan is still in their name.

Many times car buyers don't find out until months later. To protect yourself, you can require the dealer to prove they are paying off the vehicle's lien before transferring the title. Another great option is to shop your trade-in to several dealers or sell it yourself to a private party. Be sure to review our article on How to Trade-in Your Car.

Car Buying Report Archives:

  Week of June 18, 2009

  Week of June 11, 2009

  Week of June 4, 2009

  Week of May 28, 2009

  Week of May 21, 2009

  Week of May 14, 2009

  Week of May 6, 2009

  Week of April 30, 2009

  Week of April 23, 2009

  Week of April 16, 2009

Incentives Watch:

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