Replies to This Discussion

Permalink Reply by Bill Thaxton on August 5, 2009 at 2:27pm

Banks in Ohio used variable rate car loans starting in the 1980s. They were very successful and were difficult to compete against. I don't know how successful they were for the banks but dealers and customers loved them. I'd be curious to learn on the ones you quoted what drives the rate down 100 bps the succeeding year? Great idea.

Permalink Reply by Joe Bruner on August 5, 2009 at 3:33pm

Marcie,
Sounds interesting. Please provide more info.

Permalink Reply by Bill Coffman on August 6, 2009 at 10:03am

Interesting idea. Is anyone in the market currently offering these types of loans?

Permalink Reply by Marcie Belles on August 6, 2009 at 11:58am

Thanks for the feedback, everyone. I don't actually know of any auto lenders offering this type of loan; it was just something I thought of. It seems like it would be an exercise in risk management -- lenders would have to figure out, based on vehicle price, monthly payment, interest rate, depreciation, etc., how much they could lower the rate after whatever time period they choose, to still make a profit while attracting customers. I read something recently that talked about whether we, as an industry, would ever get away from manufacturer incentives and rebates, and was just thinking that this might be a possible alternative.