Sub-prime Mortgage Woes
If you keep up with current events, you are aware of the sub-prime mortgage problems affecting the U.S. You see, a few years ago, lending institutions were luring potential homeowners (with lower than average credit) special “sub-prime” mortgages. These would allow people with lower credit scores to get into a house. The benefit? The ability to get a mortgage. Lower payments during the first few years. The drawback? Everything else. High interest. Higher payments once the introductory period ends.
Now, many of those sub-prime mortgages are maturing and transitioning over to higher payments. As a result, economists are expecting a record-number of foreclosures in the upcoming years. Already, 2007 has seen a skyrocketing number of foreclosures.
So, you may be thinking, “Joe, what the hell does this have to do with my truck and SUV accessory business? I don’t sell houses.”
Well, I’m glad you asked.
This sub-prime crisis has started an avalanche. Markets (even international ones) have declined. Credit companies are tightening their belts on who can now get a loan. People with less-than-perfect credit are now having a harder time getting approved for loans.
This definitely affects aftermarket accessory businesses. You see, August new vehicle sales figures have just been released (and the market overall has seen a decline). Just about every report you read mentions two factors affecting declining sales. Number one, a lot of people have less disposable income because of increased mortgage payments. Second, because of the tightening of the credit belt, less people are being approved for new car loans.
Less loans being approved means less new vehicle sales.
Less new vehicle sales — less new vehicles to accessorize.
And that affects the sales in truck and SUV accessory shops.
What do you think? How do you think this will affect your business?
Joe Escobar
September 25th, 2007 at 1:57 pm
We see once again how irresponsible lenders and borrowers put undo financial pressure on those more responsible individuals. The exponential rise in bankruptcy filings, foreclosures and the ultimate bail out by the fed, all at the cost of the tax payer, will also squeeze the pocketbooks of the consumer. The first items to be of less importance will be the “wants” each of us have and then the “needs”. This will ultimately slow what was a robust economy. Those who will survive the best in business will be those who can diversify into other parallel businesses, more “need” oriented like repair, maintenance, etc.
October 17th, 2007 at 7:33 pm
No argument that vehicle sales will decline with credit tightening….but, this also opens new doors.
Some guys who will not buy a new truck will decide to accesorize their old one to fill their “need for change.” Also, it should be an opportunity for used car lots. Everyne knows most used cars and trucks could use some help to cover the blemishes,
I choose to think the glass is half full–2008 should be great!
February 24th, 2008 at 5:17 pm
“Number one, a lot of people have less disposable income because of increased mortgage payments. Second, because of the tightening of the credit belt, less people are being approved for new car loans.”
Homeowners who make use of home equity acceleration are far less likely to suffer from those problems:
More and more folks are using a Home Equity Line of Credit (HELOC) or a business-line-of-credit (BLOC) or personal-line-of-credit (PLOC) as an interest cancellation account to accelerate their home equity and payoff their home *years* sooner than listed on their mortgage amortization schedule.
Unfortunately, today’s Real Estate market means that folks can no longer count on appreciation to build home equity. Those who realize that they need to pay down their current mortgage debt are looking for alternate ways to aggressively (yet safely) build equity.
And they’ve discovered a perfect online system to do that; they can focus on their wealth accumulation goals while accelerating their equity simply by using an Advanced Line of Credit (ALOC) to ‘power’ the Money Merge Account™ financial solutions program.
A typical 30 year loan (of whatever type) can be paid down in 1/3 to 1/2 the time — it’s a great way to save *huge* amounts of income by eliminating a mortgage amortization front-end interest load. (On a million-plus dollar home, I’ve personally seen where the Money Merge Account™ program will save the homeowner $750,000 in interest charges!)
And the best thing – homeowners don’t have to refinance their existing mortgage or, in most cases, make any adjustments to their lifestyle.
It is unfortunate that most of us were never taught to follow three essential principles: (1) Avoid paying interest, whenever possible, (2) Use other people’s money, whenever possible and (3) Find and use a financial system that will guide you, especially if you have the tendency to go off-track. The Money Merge Account™ software and the program’s counselors use these principles to keep each homeowner focused on their wealth accumulation goals.
I’d be happy to provide further details…