LATE CAR PAYMENTS? DON'T FRET YET - READ THIS FIRST!

While the focus of government bail-outs has been on subprime home mortgages, Americans are also late in making their car and truck payments to the tune of $25 billion and probably more. And if you’ve already had a vehicle repossessed, you’re not alone; industry experts say we’ll see a record number of repo’s this year, as many as an astounding two million of them. (Above, unless you want to see a bunch of thugs like these jerks in your driveway at 2am, repo'ing your car, it makes sense to first, talk with your lender).

But there is cause for hope, with new rules which could allow people to keep their vehicles, late- pay or not, and possibly even get repo’d cars and trucks back from the bank or lender. In the Emergency Economic Stabilization Act of 2008, the so-called Bail-Out Bill, the treasury secretary is authorized to “purchase troubled assets from any financial institution.”

Treasury Secretary Paulson can now buy-up anything and everything from home mortgages to car loans, insurance policies to stocks to bonds. The government then holds these designated troubled assets until private firms again want to own them.

I think it’s probable that late car and truck loans and even leases will be labeled as troubled assets.

(Above, an Alcoa facility at the Ferrari factory in Maranello, Italy; not what comes to mind when thinking "wonder where they design those cars...?").

The auto industry, worldwide, is getting slammed as our economy moves towards official recession and possibly a Second Great Depression in the next few months.

Many prospective car-buyers find they now can’t get financing. Last week, finance giant GMAC announced they won’t loan to  any potential car-buyer with an under-700 FICO score. Dealers are saying that more than 40% of their customers now can't get financing from GMAC. Car dealers can’t get financing either, which they need to buy the cars and trucks they need from the factories to put in their showrooms and sell.

Click below for more on keeping your car or truck if you've gotten behind in your payments - You're not the only one!

Many hundreds of supplier companies, making everything from floor mats to circuit breakers to windshields and almost every other part of new cars and trucks are laying-off skilled workers and even closing their doors as new vehicle sales sink into an ever deeper morass. (Left and bottom, a new car showroom opened at the Maserati factory in Modena, Italy).

Last week, industry analyst J.D. Power and Associates predicted sales this year of 12-million new cars and trucks; which sounds like a lot, until one considers an average sales year has been around the 16-million mark for several years running. It’s as if 25% of the market for new car and truck sales in America is expected to simply disappear.

And the factories, the car-makers themselves, need tens of millions of dollars every day just to keep their doors open, their assembly lines running and their products making their way to dealerships and car-buyers.

No one wins at this game; I don’t think that even those “Masters of the Universe,” the Wall Street traders and hedge fund managers in Tom Wolfe’s masterful, “The Bonfire of the Vanities,” can come up with a way to cash-in on this financial disaster, anymore than John McCain can talk his way out of having proudly been President Bush’s best friend.

So, what does all this mean for those late with their car payments?

They should treat their car payments the same way those in danger of home foreclosure need to treat their mortgage payments. That means to stay in close touch with the lender, trying to work out some sort of payment schedule which will keep your car in your driveway and not in some repo lot, waiting to be sold at auction.

Remember, too, that banks don’t like being in the real estate business and they like the car-selling business even less. This can work to the advantage of someone late making their payments and who wants to keep their car or truck.

If car loans are labeled troubled assets, there’s the chance the loan may be re-written so interest rates, payment frequency and amounts and even the principle owed might be changed. And if a car or truck has recently been repossessed, there’s a chance, though probably small, that some might be returned; banks don’t want a bigger vehicle inventory than they already have.

So hang in there, stay in-touch with your lender,  don’t lose hope and follow the news carefully, especially the news on this Website and our other outlets (Huffington Post, Whipnotic, Santa Monica Daily Press).

Banks and other lenders don’t want your car, they want car payments. And while government moves slowly, when it finally does move, sometimes good things happen.

If you have trouble sleeping, are a glutton for punishment or a policy wonk (and aren’t we all, these days?), then to read all of HR 1424, the Bail-out Bill, visit: http://thomas.loc.gov/home/gpoxmlc110/h1424_enr.xml.

Comments

[Josh]

Again the government comes to the rescue.