How to Find Financing in a Tight Credit Market

With the current credit crisis, many of the automakers' lending institutions, also known as captives, have tightened their purse strings, making it virtually impossible for customers with credit scores below 700 to access financing. Recently GMAC, which serves as the finance company for GM, no longer offers financing to customers with credit scores below 700. In fact, in an unprecedented move, one of GM's senior level executives is serving as the spokesperson in their national ads, reassuring customers that financing is available from over 100 non-GMAC institutions. For years, GM has made money from financing their own vehicles, using GMAC. When was the last time you heard of an automaker encouraging consumers to finance their vehicles through other sources? This is definitely a sign of the times. Next, we'll hear about Wendy's customers being told to go to Burger King, if they want fries with their burger.

During this credit crunch, GM along with Ford and Chrysler, which are all apart of the "Big Three," have virtually eliminated leasing too, which typically provides lower payments than standard financing. These days the import automakers are in a better position to offer competitive financing and leasing options to customers with less than stellar credit. This serves as another reason why the domestics will continue to lose more market share than the imports. And, as the old saying goes, cash is always king, when making a major purchase. A large cash down payment always increase your finance options. Also, before shopping for a vehicle, check with your credit union. If you're not a member, consider joining one. Credit unions, which are regulated in a different manner from your average bank, are in a position to offer better interest rates and flexible payment terms.