Capital One Financial Corporation said Tuesday its net charge-offs, or the rate of bad loans, climbed to 6.42% in June from 6.28% in May in the U.S. card segment.
The McLean, Va., credit-card issuer and bank said delinquencies in the U.S. card segment, including the domestic credit-crd business, small-business lending and installment-loan business, rose to 3.85% from 3.81% in May.
Capital One’s net charge-offs in the auto-finance segment rose to 4.26% in June from 3.8% in May. Delinquencies in the auto-finance segment amounted to 7.62% compared with 7.27% in May, according to a filing with the Securities and Exchange Commission.
Net charge-offs in the international business fell to 5.36% in June from 6.5% in May. Delinquencies in the international business rose to 5.35% from 5.21% in the previous month.
Capital One shares closed Monday at $35.70.
July 15th, 2008
Could gas at $4 a gallon or higher be one of the culprits behind late car payments, too?
Advertisement
Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pa., said auto loan delinquencies will keep climbing for another 12 months. By his estimate, auto delinquencies would hit a peak in the second half of 2009.
His reasoning? We’ll be looking at a weaker job market, falling values for SUVs and trucks, high levels of debt — and yes, budget-busting gas prices.
Think of it this way: If some consumers are already paying an extra $65 to $70 a month to put gas in one car, they have even less money to put toward a $400 or $500 monthly car payment.
And what happens at $5 a gallon?
Late loans rising
Auto delinquencies have been on a fairly steady uptick.
The percentage of auto loans 30 days or more overdue hit 1.92% in the first quarter — up from 1.9% for the fourth quarter of 2007 — for loans made directly to the consumer by banks or credit unions, according to the American Bankers Association’s Consumer Credit Delinquency Bulletin. The percentage was 1.68% for the first quarter of 2007.
The percentage of overdue auto loans hit 3.09% for loans made through auto dealers or third parties, according to the American Bankers Association. That’s down from 3.13% for the fourth quarter in 2007.
However, auto delinquencies for loans made through dealers have shot up since late 2004 when the rate was 1.35%.
Zandi said his numbers indicate that auto delinquencies are showing no signs of stabilizing.
Debt pressure builds
Families are facing a financial squeeze on many fronts.
James Chessen, chief economist at the American Bankers Association in Washington, D.C., said consumers are finding themselves with fewer resources to manage debt, as they cope with rising food prices, rising gas prices, cuts in overtime hours, job losses and little income growth.
“Increasingly, it’s a story about a broader economic slowdown,” Chessen said.
Late payments on home-equity lines of credit hit an 11-year high in the first quarter, according to the American Bankers Association.
Higher gas prices put more of a squeeze on households.
In Michigan, the average price for regular gas hit $4.18 a gallon as of July 3, according to AAA Michigan. That compares with $3.07 a gallon a year ago, $2.99 a gallon in 2006 and $2.29 a gallon in 2005, according to Nancy Cain, a spokeswoman for AAA Michigan.
Someone who drives 15,000 miles a year — and gets 20 miles a gallon — would now be paying roughly $260 a month for gas — up from about $192 a month last year.
Brian Bethune, chief U.S. financial economist for Global Insight in Lexington, Mass., said troubles for auto loans won’t improve until the housing market turns around.
After all, many overstretched consumers may try to pay the mortgage before making a car payment — especially if that car is an SUV or truck that’s dramatically declining in value because of higher gas prices.
Contact SUSAN TOMPOR at 313-222-8876 or stompor@freepress.com.
July 6th, 2008
AutoMart.com announces their new online partnership with myAutoloan.com, an online auto loan provider. AutoMart.com has launched a new car Auto Finance Center Powered by myAutoloan.com. AutoMart.com customers can apply for a new car loan online and receive multiple loan offers. All loan offers are presented to customers online in real time. Customers simply select the loan offer that makes the most sense to them; they then receive a blank check in the mail. The new service, Auto Finance Center Powered By myAutoloan.com, allows their customers with the ability to obtain financing prior to walking into the dealership to purchase their new car. The online Auto Finance Center application and loan offer process is easy, fast and secure, while simplifying the auto financing process.
“We are thrilled to have AutoMart.com join the Powered by Auto Finance Center marketplace lending platform,” said Greg Thibodeau, CEO of myAutoloan.com. “This partnership offers their customers real value, with real lenders providing real loans, real-time online.”
“Our goal is to help our customers in the auto buying process and this is just one more way that we can assist new car buyers,” said Stephanie Esquivel, National Sales Manager at AutoMart.com. “This service is free to applicants and provides real loan offers online in real time, within the AutoMart.com web site and brand, our customers will be delighted.
About AutoMart.com
AutoMart.com(TM) is the Internet’s largest automotive website featuring new, used and certified pre-owned car listings exclusively from automobile dealers. With a database of over one million cars for sale, AutoMart.com showcases listings provided by Auto Mart® Magazine, Harmon Autos, Auto Deals, Truck Mart, Auto Mercado and Diablo Dealer. AutoMart.com is owned and operated by United Advertising Media, a division of Cox Enterprises, Inc.
About myAutoloan.com
Located in Irving Texas, myAutoloan.com is a subsidiary of Horizon Digital Finance, L.L.C., and a nationally-licensed direct-to-customer Internet-based auto financing marketplace utilizing Preferred Placement® technology and Preferred Dealer® auto lead processes. myAutoloan.com is quickly becoming a recognized leader of the online auto-buying life cycle process by providing innovative technology-driven solutions through Powered By; Auto Finance Center and licensing opportunities. Horizon Digital Finance and myAutoloan.com are quickly becoming recognized leaders of the online direct-to-customer online lifestyle financing process by providing innovative technology-driven solutions through “Powered By” and licensing opportunities
June 19th, 2008
In the current climate of declining property values, higher interest rates, and changes in available mortgage products, more and more homeowners are becoming delinquent or going into foreclosure. Many folks are losing their hat, their home and their good credit, through no fault of their own.
In addition, as a result of these challenges, many Americans also face the difficulty of getting approved for a car loan. Crawling out of the hole that a bad credit score creates can take years of persistence and patience. So, what can Americans in that predicament do until their score goes up? And what can they do to help get their scores up?
There are many lenders out there who understand this dilemma and offer an excellent way to start the long process of credit recovery. An auto loan with a trend of on-time payments is a great way to reestablish credit. A great place to start the loan process is online at a site like Car.com, a popular consumer automotive information site committed to helping customers with special finance needs get approved for a loan and into the right vehicle.
Car.com is a free service that works with a nationwide network of finance companies and dealers to help customers with special finance needs. The service connects consumers with a dealer or lender who operates in the consumer’s area, who specializes in secondary finance, and who is dedicated to helping car-buyers get the vehicle they want at a price they can afford. The advantage a site like Car.com provides is that consumers who have been turned down by other dealers or banks have an opportunity to find the right lender for their particular situation online and in the comfort of their own home.
“Knowing we would have to work with a bank that handled ’second chance’ cases, I thought that they would put us in a cheap car, but this was not the case! They showed us a VW Jetta that was right within our price range and looked and drove like new!” says Kellie M., Waycross, Ga.
A site like Car.com also provides help for students or first-time car buyers, who struggle from the catch 22: How do you get a loan if you don’t have credit, since you need credit to get a loan? Car.com believes that there is a lender for everyone.
Here is how the process works: Click on Car.com to help find your car loan, the online questionnaire only takes a few minutes to complete. Car.com then securely delivers your information to its network of third party lenders and dealers. Loan decisions normally occur within hours. While you’re there, if you need to find out your credit rating, use Experian Automotive to receive a copy of your credit report online.
Also at Car.com you can search for a vehicle, see vehicle reviews, previews, videos, histories and discussions. Find a form, fill out the short application and learn about financing. You can compare vehicles and figure out your payment schedule with an online payment calculator.
To find out what vehicle you will qualify for, fill out the short application at www.car.com, and start improving your credit.
Copyright © 2007, ARAnet, inc.
June 19th, 2008
A few years ago, I was in the market for a new car. After much debate, my partner and I decided that it would be best to buy rather than lease. This is not always the right choice for everyone, but it certainly was the right choice for us. Luckily, our friend owns a car dealership a few states away and educated us about some common practices in the car business, and how we can avoid potentially huge mistakes when financing a car. Here’s some tips to help you prepare for the negotiations:
1. Get a copy of your credit score before you ever set foot into a dealership. You can get a free copy of your credit report by visiting the websites for one (or all) of the three main credit bureaus: Equifax, Experian and Trans-Union. I did this, and boy was I glad. My credit history was pretty spotless and my credit score was really high. When I visited one particular dealership, the salesman went into the back office and pulled my credit report. He came back and said grimly, “Well, I have some bad news… you’ve got bad credit. I’m afraid the loan rate that you’ll qualify for is going to be much higher than I expected…there’s really nothing I can do.” I told the salesman he was a flat out liar and asked to see his manager. I was promptly assigned a new salesman. Had I not looked at my credit report ahead of time, I could have fallen victim to his lame attempt to puff up my rate. That would have cost me thousands of dollars over the life of my loan, and he would have gotten a nice big commission for his deceitful practices.
2. Join a credit union that works with your local car dealers. Credit unions often give loans (including home mortgages, lines or credit, personal loans and auto loans) at drastically lower rates than commercial banks. They also usually have lower fees overall and much better customer service because they are locally based. Check with your employer, union, school, or religious organization. I even know of a credit union that allows you to join if you are a member at a particular museum.
3. Check your bank or credit union website for their auto rates. This will give you an idea of what the the car dealer will offer as a high end rate. Because car dealers work in volume, they typically buy the loan rates from banks at a drastically reduced rate. Then, when they sell it to the consumer, they add extra percentages and pocket the difference. Typically the end rate is still lower than if you were to just walk in and ask a loan officer for a loan, but it’s possible to get amazingly low rates if you know exactly how to ask for it.
4. Ask the finance manager for the most current rate sheet. In my personal situation, at the time I was buying my new car, bank and credit union websites in my area showed rates for new cars at around 6%. After negotiating with the salesman I then met with the dealer’s financing manager. He told me that because I had good credit, I could qualify for a loan at 5.5%. Sounds like a great deal, right? Wrong! I asked the finance manager directly, “can I see a copy of today’s rate sheet? I want to know what you are buying the rate at today.” At that moment you could have heard a pin drop in the room. The finance manager was in shock. He was reluctant, but eventually gave me a copy of the rate sheet. The rate sheet showed that the dealer was buying the rate from my credit union at 2.5%. That’s right. If I would have taken his offer, the car dealer would have made 3% on the loan for a $35,000 vehicle. Instead, I told him, “I understand that everybody needs to make money, so I will give you 1% over what you are purchasing the rate for.” Because I had good credit, and he knew he couldn’t get away with it, I got a loan from my credit union for my new car at just 3.5%. Using a loan amortization calculator I found online, I figured that I paid about $3,200 in interest for that loan. Had I just gone with the finance manager’s original offer, I would have paid over $5,100 in interest for the same loan. By just asking one question, I saved myself around $1,900.
June 11th, 2008
