More drivers are turning to used cars

MID-MICHIGAN (WJRT) -- (10/13/08)--The economic crisis is creating a credit crunch as banks and credit unions are tightening the purse strings on loans.

The credit crunch is affecting big business, but it's also trickling down to consumers looking to finance a big-ticket item.

Believe it or not, during these tough economic times, certain businesses are actually flourishing.

One such business is the used car business -- specifically those who offer buy-here/pay-here financing.

As lenders make it tougher for people to qualify for new loans, many are finding it much harder to drive a brand-new car off the lot.

In turn, they are settling for "like-new" from places like Champion Auto Sales in Flint.

"People who had a 600 to a 650 credit score last year were able to go to a Pasty Lou or a new dealership or some of the others and possibly get a car," said Champion Auto Sales Manager Jerry Hewitt.

"That same person with the same credit score this year would have to come to us."

Hewitt says he has seen a significant increase in business since last month.

"I'm seeing a big spike in the number of applicants, and I'm also seeing a spike in actual sales also, for the simple reason I got more applications," he said.

Hewitt attributes the new surge in the buy-here/pay-here car market to the tightening of the purse strings by lenders.

"Banks are a lot more stringent, like I said, with the economy being what it is," Hewitt said. "They have to look at things more carefully. They are not approving as many deals as they did."

Places like Champion Auto Sales also use banks as lending sources, but Hewitt says what sets them apart from more traditional dealerships is they can offer more tailored lending sources.

"Your credit determines where you are going to go or who do we go to as far as to lend you the money," he said.

"We prefer that you got your own financing. If you can't, we have a program for everybody, and that's the buy-here/pay-here where we take care of it in house."

Hewitt says not everyone that applies will be financed, but most people are. He expects that sales and applications will continue to grow in this ailing economy.

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