Car Loans help Driving Car Sales

Detroit (America): The car company Chrysler LLC is struggling to stall the ever fast declining sales in cars, so therefore, in an attempt to put sellers back in the driving seat and revive sales into first gear, the firm will begin offering o% financing on many of its models after its lending arm received a commitment of $1.5 billion in low - interest loans from the government.

The car maker will offer zero - percent financing on Jeep products such as the Commander and the Cherokee in a move that will hopefully boost car deals. The company will also expand its loans to those with credit scores in the 620 range.

Chrysler, which is the third largest U.S car maker, is trying to become king of the road again after it suffered from slumping sales and cost erosions. New car and truck purchases fell 53% alone in December, compared with the same month a year earlier. For the year, sales plummeted by 30.

Chrysler executives have claimed that they were put at a disadvantage when General Motors Corp's (GM) financial arm, GMAC LLC, received $6 billion at the end of December, but there is a little glimmer of hope at the end of the tunnel.

Chrysler sales chief Steve Landry said: "Dealers said they lost 20% to 24% of their business when they tightened credit. We expect these new incentives to give a lift to their business even as soon as this month."

Therefore, the new loan from the government offers them some rest bite from the economic worries.

Drop in consumer confidence
Scott Cook's sales are also down at Cook Chevrolet, but he said he was doing better locally than other dealers nationwide:

"We're doing better than other places nationally. The economy seems to be doing better here. You talk about the stock market, but around here, gas prices affect people a lot more than the stock market, and those are down, which helps people."

However, Cook summarized that the biggest problem for car dealers is the lack of consumer confidence encouraged by the credit crunch.

"Once people can kind of see that things aren't going down the tubes, that they still have a job and they're still making the same paycheck, then things can start getting back to normal. I just hope everybody realizes that things are getting back to normal, here at least," Cook said.

Director of communications for General Motors Marketing and sales, Pete Terns said that in the long term car prices will eventually increase, but at the moment sales are surviving on loan financial aid.

For the car insurance industry to really make it out of the country's recession and be viable in 10 years, consumers will have to be interested in buying new cars again.


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