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About The skanner. (Portland, Or.) 1975-2014 | View Entire Issue (Oct. 19, 2016)
Page 8 The Skanner October 19, 2016 Financial Literacy Four Things You Should Know Before You Sign That Car Loan W hile there’s nothing new about new car fever or the annual ad blitz, there’s a good deal of news on how consumers are choosing and paying for their cars. For example, new car sales increased more than 5 percent from a year ago. At the same time, the average credit score for a new car loan dropped to 710 and even lower to 645 for a used vehicle. These data points provided by Expe- rian, a major market intelligence irm, also recently reported that today the average monthly car payments are also at an all-time high: $503 for a new car and $376 for a used one. Car loan terms are also longer and the amounts i- nanced are both larger too. On average, both new and used car loans are respec- “ Charlene Crowell NNPA Columnist impact on the loan market.” Consumers short on savings for a down payment, but anxious for a new or nearly-new car may opt for a lease rather than a purchase – a very com- plex transaction with pitfalls of its own. During the irst quarter of 2016, nearly a third of all new car transactions were leases. For consumers, the really ‘good deal’ All too oten consumers of color — especially Blacks and Latinos — consistently try to nego- tiate a ‘good car deal,’ but oten wind up paying more than others tively 68 and 66 months. The average new car loan is now an all-time high at $30,032. “The continued rise in new vehicle costs have kept many consumers ex- ploring options to keep their monthly payments afordable,” said Melinda Zabritski, Experian’s senior director of automotive inance. “As long as vehicle prices continue to rise, we can expect leasing rates to grow along with them… The record highs we have seen in ve- hicle prices also have had a signiicant is tied not only to the cost of the car, but also to the terms of the sale as well. Sale or lease prices, interest rates, length and other items are also important to the art of ‘the deal’. Unfortunately, all too oten consum- ers of color — especially Blacks and Latinos — consistently try to negoti- ate a ‘good car deal,’ but oten wind up paying more than others. The practice of car dealers adding extra interest to a car loan has a long history of dis- crimination that has led to a series of multi-million dollar settlements with inance arms of major auto manufac- turers and other ones with banks. Fortunately, the Consumer Financial Protection Bureau (CFPB) recently de- veloped a series of consumer resourc- es that can better inform those making decisions. Topics included in the series cover: how to plan for a purchase; loan options and how to better negotiate a car loan. A consumer guide available for download can also serve as a handy ref- erence, providing greater detail on the process from determining how much to borrow to closing the sale. Most importantly, CFPB provides speciic steps to take before going to dealers. The CFPB strongly encourages con- sumers to get an ofer from a bank, credit union or other inance source before setting foot in the dealership. The Bureau also urges caution when striking agreements with dealers. Consumers should carefully review loan paperwork to catch diferences between what was verbally promised against what the paperwork requires borrowers to do. Consumers should never sign any loan with unclear terms, blank spaces or language they do not completely understand. According to the Center for Responsi- ble Lending (CRL): • 80 percent of car loans are inanced through dealers; • At more than one trillion dollars, outstanding car loans are the third highest amount of consumer debt, surpassed only by mortgages and student loans; and • Although borrowers of color report trying to negotiate loan terms more than other consumers, they wind up paying more for inancing. Read the rest of this story at TheSkanner.com U.S. Small Business Administration and Milken Institute Partner to Increase Access to Capital for Underserved Communities U.S. Small Business Administration WASHINGTON, DC—In September the U.S. Small Business Administra- tion (SBA) and the Milken Institute announced the Partnership for Lend- ing in Underserved Markets (PLUM) Initiative, a groundbreaking collabo- ration to develop and test initiatives designed to more efectively provide capital to minority-owned business- es. Following the Great Recession, small business owners, especially those setting up shop in underserved markets, have faced a recurring prob- lem of limited access to capital. Conventional small business credit is still only at 85 percent of its pre-re- cession level. These gaps are especially evident in metropolitan areas with higher proportions of minority-owned busi- nesses including Baltimore, Mary- land and Los Angeles. The PLUM initiative responds to this persistent challenge by bringing together leaders and policy experts from SBA and the Milken Institute to develop recommendations toward in- creasing access to lending and other sources of business capital in minori- ty communities. The long term goal of the initiative is to increase the capac- ity of lenders to better serve histori- cally underdeveloped sectors.