CAR CREDIT AT HAND.

Byline: Tim Christie The Register-Guard

Auto dealers hammered by sluggish sales, the market collapse and a staggering economy have a message for skittish, would-be buyers: Financing is available for car and truck purchases, despite a nationwide credit crunch.

"There is a perception out there is no financing. It's not true," said Robert Scherer, owner of Springfield Buick. "We have plenty of sources to go to for financing, plenty of money."

"Credit unions are still loaning money. Ford Motor Credit and Toyota Financial are still loaning money," said Dave Blewett, president of Kendall Auto Group, the Eugene-based dealer that operates 13 stores in Oregon, Idaho and Alaska.

The biggest change is that lenders are scrutinizing borrowers with poor credit history much more carefully this year than last.

"Credit is available for those that qualify and have decent credit," said John Sheppard, president of Sheppard Motors in Eugene. "What has changed is, those that probably should not have received it in the past aren't going to receive it now. ... It's getting back to what should be fair, reasonable and normal in my brain."

Art Spinella, president of CNW Marketing Research in Bandon, studies automotive lending throughout the United States and said credit has tightened across the board.

"Regardless of whether someone has prime, near prime or subprime credit history, everyone is having a harder time getting an auto loan," he said.

CNW research indicates that the lending environment in Oregon is slightly better than the national picture, but that credit is definitely tighter here than it was last year.

CNW found that in the first nine months of 2008, lenders approved 69 percent of auto loan applications in Oregon, compared with 83 percent for the same period in 2007. Nationally, 64 percent of auto loans applications were approved, compared with 83 percent last year.

The biggest drop in approvals came at the bottom end of the credit scale: Auto financing is far less likely to be approved for consumers with poor credit. Only about 20 percent of auto loan applications were approved for Oregon consumers with subprime credit ratings in the first nine months of 2008, compared with a 76 percent approval rate in the first nine months of 2007. CNW defines subprime as a credit rating below 630.

In another measure, Oregonians with prime credit had to apply to nearly three banks before getting approval in the first nine months of 2008, compared with 1.3 banks for the same period in 2007. Those with subprime credit ratings had to apply to 8.6 banks before getting approved, compared with 3.4 banks a year ago.

But dealers say local banks and credit unions have stepped up even as other lenders - notably General Motors Acceptance Corp. - have tightened up their credit.

"There is a misconception that it's hard to get financing for a car, when the reality is there are plenty of financing options out there," said Greg Remensperger, executive vice president of the Oregon Auto Dealers Association.

Interest rates for car loans - now as low as 4.99 percent - are the lowest they've been in years, said Scherer, the Buick dealer.

Scherer said he and other dealers belong to a group called Credit Union Direct Lending, which enables consumers to tap into financing from as many as 10 different credit unions in the area.

"You might find some of the larger places pulling in, but credit unions, who are doing most of the lending, have plenty of funds available," he said.

Northwest Community Credit Union in Springfield is making plenty of car loans, although consumer demand has softened a bit, said Matt Purvis, the vice president of marketing.

"The lending supply is there - we continue to make those loans," he said. "But it looks like folks are holding back a little bit and reconsidering major purchases."

Northwest Community Credit Union has made "some minor tweaks" to its lending rules, but "our overarching guidelines have stayed the same," he said.

While financing may be available, many consumers worried about the economy appear to be in no rush to borrow money for big-ticket purchases.

"Any time the economy gets tough and you're a big ticket item, you're affected by that more than anything else," Remensperger of the dealers' association said. "Our dealers are slow right now. There's not as many people on the lot right now. People are watching their cash flow."

"The consumer is pretty much paralyzed right now, regardless of whether they have the ability to buy a car or not," Sheppard said.

"We're kind of the tip of the spear" when it comes to consumer confidence, Blewett said.

On the bright side, falling gas prices is helping to spur sales of light trucks and SUVs, he said. And manufacturers anxious to move cars are offering the biggest incentives Blewett said he has seen in 24 years of selling cars.

At Oregon Roads in Eugene, which specializes in arranging auto leases for businesses and consumers, owner Joseph McKinney said, "Right now, this is as about as low as I expect new car prices to be. I see inflation on the horizon."

Gregory Harrison of Eugene, a stage and television actor best known for his role in "Trapper John, M.D." in the 1980s, took credit out of the equation when he decided to buy a car for his 17-year-old son, Quinn. On Friday, he bought a used car - a 2003 Mustang - from Sheppard Motors for $10,000 cash.

"In these economic times, buying a new car didn't seem like the smart thing to do," he said. "We looked at the state of the economy and the state of our budget, and said, `What's the smart choice?'?"

Oregon Auto Loan Approvals

Applicants with subprime credit ratings face more scrutiny this year

Prime 2007: 93.04 percent approved

Prime 2008: 86.23 percent approved

Near-prime 2007: 91.21 percent approved

Near-prime 2008: 80.37 percent approved

Subprime 2007: 76.29 percent approved

Subprime 2008: 19.67 percent approved

Source: CNW Research