It has been four months since the Wall Street meltdown and the credit crunch shook up an already unstable automobile industry.
The bad news for consumers is that despite federal bailouts to banks and automakers, the buying landscape has changed and may never return to what shoppers have come to expect in the last five years.
But if you need to buy a new vehicle in this environment, here's what you can expect:
1. End of 100 percent financing. Those 100 percent finance deals are virtually gone. This is particularly true of those "we'll pay off your trade no matter what you owe" negative financing deals. They were to the auto industry what subprime mortgages were to the housing industry. Lenders still in the automotive market are demanding down payments of 10 percent to 15 percent from most buyers, including those with better-than-average credit.
2. Restrictions on zero percent financing. Although buyers will continue to see ads for zero percent financing, fewer shoppers will qualify for those loans. Unless your credit score is above average -- more than 700 in most cases -- don't be surprised if the dealer says you can't get that attractive finance rate and instead offers something in the 7 percent to 10 percent range.
3. Plunging trade-in values. Trade-in values are dropping. Cash-strapped dealers -- and there are more of those today than just six months ago -- are not eager to take risks on whether they can move that 4-year-old trade-in quickly. The result is that buyers won't have as much bargaining room.
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4. Reduced inventory. Expect some dealers to have less inventory for buyers to choose from than before the credit crunch. Just as lenders like GMAC have tightened limits on consumer loans, they have clamped down on what is called floor financing -- the loans to dealers that allow them to stock inventory.
5. Disappearing dealers. The dealer you bought your last car from may not be there today. Although there has always been an ebb and flow of dealers going out of business, we're starting to see a big contraction among franchise dealers. While that may mean a desperate dealer will be eager to make a good deal now, in the long run fewer dealers means less competition, particularly in smaller cities.
6. Tougher credit requirements. If your credit score is much below 700, you're going to pay higher interest or may not even be able to get a loan. The credit crunch could force buyers who could have qualified for a new car a few months ago to turn to independent used car lots that charge double-digit interest rates.