Over the past two years, the U.S. auto industry has been taking a turn for the worst – and global automobile makers have followed suit. From a potential Chrysler bailout to the reduction of jobs with Mini Cooper, more consumers are starting to ask themselves if it’s worth getting a car loan for a “dying” automobile. Sure, there are some amazing deals to be had out there thanks to the tumbling industry – but is it worth buying or financing a car whose maker might soon be out of business?
When it comes to getting a car loan for a dying automobile, the answer is a bit more complex than you may think. Yes, those deals might be quite tempting, but try to tear your eyes away from the incredible value by thinking about your car loan in the long-term. Let’s say you got into an accident with your new car, only to discover that the automaker is now defunct and unable to fix your car for free under the condition of your warranty. This means you either have to pony up thousands for repair, or just buy a new car altogether – with another car loan still hanging over your head.
The point of this story is that if your car’s maker falls out of business, you can pretty much kiss your warranty good-bye. While there are several potential laws that are prepared to offer reimbursement for consumers with dead warranties, it’s likely that you’ll have to pay out of pocket for repairs, and then wait with all of the other creditors for your reimbursement to come in the mail.
In other words, you might be putting your finances at risk by getting a car loan for a dying automobile!
If you can’t stand the idea of paying out of pocket for repairs to your car, then it’s a good bet to get financing for a car with a company that’s still relatively healthy. Out of the Detroit Three (which are the biggest automakers in America), Ford is still a strong company, with a healthy outlook for after the recession. Of course, European cars are still strong, and cheap yet quality Japanese automakers expanding their plants and dealerships across the world.
However, if you’re willing to gamble on the possibility of having to pay two car loans in the future (remember, we’re talking about the hypothetical here!), then there’s a lot of great opportunity out there, whether you’re looking to buy American or European. Dealers are desperate to move their inventory, so make sure you shop around to get the best deals possible. Additionally, dealers and lenders will be much more likely to offer you attractive financing rates, so be sure that you get the best deal, whether it be straight from the dealership or through a private lender.
Sure, the declining auto industry has changed the rules about getting a car loan; but if you do some savvy research, you’ll be confident in your car choice – and exhilarated with your fantastic loan terms!