Before the car industry restarted after the enhanced community quarantine, many had been expecting car sales to roll to an excruciatingly slow start, with consumers generally expected to play it safe as they dealt with a worsening economy brought about by the pandemic. The fear was that the automotive business wouldn’t rebound until next year—or late this year at the earliest.
But then a multibrand dealership network executive says the opposite is true.
“We were expecting the market to be really down as consumers were expected to hold off on their purchases, but it’s actually the other way around,” LICA Auto Group chief operating officer Tey Sornet tells VISOR. “There are so many buyers right now, but it’s the banks that have been very cautious with loan approvals.”
LICA operates dealerships for the following brands: Chevrolet, Foton, Honda, Hyundai, JAC, Kia, MG, Mini, Nissan and Subaru. To say they have a firm grasp of what’s happening on the ground is an understatement.
Here’s the telling part: The banks, according to Sornet, are being very prudent not just with car buyers but also with the car dealers themselves.
“Most dealers use bank credit lines to purchase their stocks from the distributor,” the executive shares. “If the banks cut these credit lines, dealers won’t be able to get their supply. Dealers with a huge inventory prior to the lockdown are fortunate, but even they should already be running low by now.”
Thankfully, Sornet notes, their partner banks have promised to be more supportive beginning this month of July.
There are so many car buyers right now, but it’s the banks that have been very cautious with loan approvals
As for the car buyers, they need to iron out a few things if they wish to get fast approval for their car loans at this time. According to BPI Family Savings Bank Retail Loans head Dennis Fronda: “In general, banks need to establish that a client has the capacity to pay the monthly loan amortizations.”
As a piece of advice, Fronda has the following tips for auto loan applicants:
- Have some savings or extra funds
- Have a clean credit history
- Have a clear spending limit
- Have a tenured job or business
- Have a trusted financial partner
Otherwise, you might as well count yourself among those who will have a difficult time convincing any bank to trust you with a new vehicle loan at the moment.