U.S Government plows more cash into car loans.

U.S Government plows more cash into car loans.

When we thought we had seen the end of high risk government loans to private companies with taxpayers money the United States has decided to inject $ 7 billion dollars into car loans. Why? The logic works as follows, if car loans are scarce, interest rates won’t be competitive and consumers will wait to buy a new car. An injection of capital is hoped to kill two crises with one bill. First the ailing car industry manufacturers like Chrysler, GM and Ford will benefit from the extra car loan cash while consumers that have borrowed conservatively in the past have a new chance of getting into debt.

The question is if the United States is providing great car loans for people that don’t want them or need them.  Do consumers really need the government to provide car loans for car manufacturers? Wouldn’t banks and credit providers that already provide car loans take the slack if can manufacturing giants like Chrysler and GM stopped providing car loans.

The answer to those questions are hard to come buy unless you own a parallel universe jumping device but it is useful to understand the factors the influence the current credit market and the car industry.

Loans are a basic part of capitalistic society. Few of us could afford to buy a car outright without saving for years. Arguably, this lack of available cash in the form of car loans would slow down the demand of new cars as average consumers moved towards the used car market with it’s more accessible prices. As desirable and logical as this seem, market analysts prefer to find better ways for consumers to spend more than they can afford. Sadly it does seem that our current model of capitalism does depend on constant spending outside of our means to keep the cogs of our capitalist system working.

Another advantage of this recent injection of car loan cash is that manufacturers that are struggling under the current credit and car industry crises can still compete with Toyota and Ford with low interest and flexible car loans. Keeping two big players like Chrysler and GM in the game could be a shrewd move from the government or just another taxpayer dollars black hole.

There is no denying that taxpayers should worry about yet another move from the government to hand out cash to failing company with little hope in receiving a return from the “investment”.

However if you are in the market of finding a new car and want a car loan this might be the time for you. If your income is solid and your credit score matches you could find yourself an excellent deal on your new car loan. With banks and car companies fighting for low risk customers you could haggle for unbelievable car loan interest rates that look more like home loan interest rates.