Barack Obama’s presidential campaign said Friday that the federal government should act swiftly to help unlock credit for the financing of car loans crucial to U.S. automakers. The lack of access to consumer car loans was hurting the industries and threaten the nation’s manufacturing sectors, Michigan’s congressional delegation said this week.
The Democrat supports call by Michigan lawmakers for the Treasury Department and the Federal Reserve to use their authority in the seven hundred billion dollars bailout plan to help the industry deal with the tight credit markets said Jason Furman Obama’s economic adviser. Auto finance companies and banks tightened credit standards for they can’t borrow money to lend or they been reluctant to lend and risk defaults.
Obama called the administration to speed up the availability of $25 billion in low-interest loans approved by Congress last month. The funding would help auto manufacturers and suppliers retool their plants and build fuel-efficient vehicles.
Obama’s economic adviser Jason Furman said “He doesn’t want to take any options off the table to help the industry through this financial crisis.” Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke could take several steps under the bailout provisions, said the Michigan lawmakers. They also said the companies were considering asking the Fed for access to a program that provides low-cost credit.

Executive Chairman Bill Ford said Friday, Ford Motor Co. will keep investing in new fuel-saving technology even if it does not get any government loan guarantees, but the loans will help the automaker get the technology to market more quickly. In an interview at an event marking the loans are important to help the industry deal with higher fuel economy standards, carbon dioxide emissions limits and a marketplace that has shifted from trucks to more fuel-efficient cars.
Ford said “I think it is important to our whole industry, all the retooling were doing as an industry, to really meet the future demands of fuel economy and CO2 and all the new technology that’s really going to be needed to achieve that.” The company will go on without the loan guarantees, but its work will be tougher.
The company doesn’t have a number in mind for how much it would borrow. But Ford said the government-backed loans, which Ford (F, Fortune 500) intends to repay, would mean the difference between single-digit interest rates and the double-digit rates now available in a tight credit market. That potentially could save the troubled automaker millions of dollars.
Ford has lost $23.9 billion in the past 2 ½ years and has had to mortgage its assets to stay in business as the U.S. auto market has shifted away from profitable trucks and sport utility vehicles to more fuel-efficient models.

The Detroit’s big automakers have been trying to persuade Congress to speed up funding for $25 billion in subsidized loans to help retool their old plants. Before the Congress adjourns on September 30, the Detroit’s lobbyist wants the funding approved. The industry’s deteriorating state; they say they need an extra $25 billion and all to be lent at low rates of 5%.

The team flew in from Detroit and Washington and intent on using the conventions myriad reception, lunches, parties, and meetings to make the case for the loan program to as many members of Congress. Ziad S. Ojakli group vice-president for government and community relation at Ford Motor says “This issue is white hot” and “We are focusing on it like a laser.”

According to Greg Martin the General Motors’ Washington spokesman, the engineering and plant-retooling costs required to meet those standards will run to some $100 billion. Congress agreed to provide low-cost loans but has not approved the funds. Detroit needs fast access to cheap capital or the industry’s woes will deepen said Ojakli. He argues that it is critical to the U.S. to keep auto manufacturing alive as it is to support the country’s financial system with aid to troubled banks.

The White House said it was in discussions about a proposal to give the auto industry $25 billion in government-issued low-cost loans and a sign that automakers may be making progress in their effort to get financial assistance.

Dana Perino the White House spokeswoman said “it’s something we’re aware of and we’re talking to the members of Congress and also the people in the auto industry, and thinking about what they might think would be required from their perspective.” Dana Perino said she was not prepared to say what funding amount “the White House would or would not support.” She also said the White House may say whether it supports the proposal in the next day or two.

Energy bill that was signed into law by President Bush included a provision to provide $25 billion in direct loans to automakers but the bill didn’t allocate any funding and it would cost $3.75 billion to guarantee that money. Detroit’s automakers and the United Auto Workers argue a $50 billion package may be necessary and which would cost $7.5 billion to guarantee. Automakers could use the money to retool plants to build advanced technology vehicles that were at least 20 percent more fuel-efficient than the minimum required

Obama is running advertisements tweaking McCain’s support of the smaller package and Michigan is an important state in the presidential election. Barack Obama is the Democratic presidential nominee that has endorsed the $50 billion package and while his Republican rival John McCain endorsed the $25 billion package.

The U.S. automakers is still dependent on pickups and sport utility vehicles and likely gave up more of their home marker again as their shrinkage eclipsed that of Japan’s car focused Toyota Motor Corp. and Honda Motor Co.. General Motors Corp. and Chrysler LLC probably led a drop in U.S. auto sales last month as new buyer incentives failed to stem an industry slide that began December.

August rate was 13 million based on a survey of analysts and economists. Offering employee discounts to all customers and no-interest loans may have kept results from falling to July’s 15-year low, when new vehicles sold at an annual rate of 12.6 million and a decline would extend the industry’s slump to nine months.

Jeff Schuster, chief of global forecasting for consumer research firm said “we would expect things to be worse for the month if it were not for the significant incentives.” General Motors the largest U.S. automaker is probably will say sales slid 29 percent and while Chrysler’s may have plunged 34 percent and Ford Motor Co.’s by 21 percent based on the 5 analysts’ estimates.

George Pipas sales analyst of Ford said “we’re in a very difficult period right now,” and also said Dearborn, Michigan-based Ford’s sale is likely to be close to July’s 15 percent decline. Automakers had to contend with the weakening U.S. economy. The Labor Department will say Sept. 5 that August non-farm payrolls fell by 75,000 jobs.

The Bangko Sentral ng Pilipinas (BSP) said, credit card receivables as well as auto loans dipped in March in line with weaker consumer spending due to higher prices of oil and other commodities. BSP said in a statement, bank’s card receivables slipped 0.6 percent to P115.4 billion in March this year from the end December level. Receivables went up by 19.7 percent compared with P96.430 billion in March last year.

Universal and commercial banks accounted for 81.1 percent or P93.6 billion of the total receivables and while credit card subsidiaries held 14.8 percent or P17.1 billion. Of the total receivable, the current amount reached P103.660 billion while past dues amounted to P11.757 billion. Non-linked thrift banks carried the remaining P4.7 billion on their balance sheets.

Banks’ loan portfolio amounted to P2.137 trillion in March and higher than the P2.130 trillion at end December and the P1.925 trillion in March last year. Price pressures increased in the first quarter and with inflation rising to 5.6 percent from 3.3 percent in the previous quarter. Credit card receivables comprised 5.4 percent of lenders’ total portfolio, higher than the 5 percent in March last year.

The substantial decline in auto loans stemmed from the change in financial reporting of auto loans under the new Financial Reporting Package said BSP. Thrift banks took the biggest slice of the auto loan market at 61 percent while universal and commercial banks held 37.3 percent.

This I found in the web that may interest you and give you information about automakers.

WASHINGTON (AP) — Automakers plan to urge Congress to support funding up to $50 billion in low-interest loans over three years to help them modernize their assembly plants and develop next-generation fuel-efficient vehicles.

Industry officials said the loans, which are twice the amount authorized in last year’s energy bill, are a top priority when Congress returns next month because of the declining fortunes of Detroit’s automakers and tightening credit markets.

“The amount of concern and urgency from the Detroit companies has increased in the last month and significantly ratcheted up what they’re communicating what their funding needs are,” said Alan Reuther, legislative director for the United Auto Workers union.

Congress authorized $25 billion in low-interest loans in last year’s energy bill, but the auto industry’s allies in Congress have been unable to get funding for the plan.
The loans would provide low-interest credit for up to 30 percent of the cost of retooling facilities to build hybrids, plug-in hybrids, electric cars and other alternatives.

Detroit’s automakers have struggled this year amid a sluggish economy and consumers shunning large sport utility vehicles and trucks because of high fuel prices. General Motors Corp. reported a second-quarter loss of $15.5 billion and Ford Motor Co. reported an $8.7 billion loss.

The auto industry’s future has been a top issue in Midwest battleground states key to the presidential race. Sen. John McCain had opposed the retooling efforts, arguing that his $5,000 tax credits for consumers who buy fuel-efficient vehicles and a $300 million battery prize would accomplish the same goal.
But in a statement released Friday, the Arizona Republican said Congress should fund the loan program in the energy bill: “I believe we should fund it and take action that will assist Detroit and its suppliers in making it through this difficult time of transition.”

When applying for an auto loan, most buyers grapple with some question of whether they should opt for a fixed or floating rate option. The question assumes importance as car loans have a lower tenure than home loans, home loans have a 15 – 20 year tenures, during the borrower will go through a few rate cycles.

Car loans are for three to four years and maximum tenure: 7 years and that on an average. It means that a person mostly would find it difficult to gauge that whether they are entering a rising or a falling cycle. Many public sector banks, including State Bank of India, Bank of India and Bank of Baroda have started offering floating rates on auto loans. ICICI Bank was offering both floating and fixed options way bank in September 2007 and is planning to offer only floating rate loans in August 25. Private sector lenders are beginning to offer floating rate loans.

“Earlier, we were planning to increase over fixed and floating rates by 50 basis points each. However, now we feel that the interest rate cycle has almost peaked. For the customer, it will make a lot of sense to get into floating rate auto loans,” said N R Narayan, head of vehicle loan in ICICI Bank. He also said that the interest rates would move southwards after that.

Director of Acorn Wealth Govind Pathak said “Six months ago, the answer would have been definitely fixed because of the uncertainty in the interest rate scenario. Now, floating rate looks like a better option.” Though this is the immediate solution as far as the choosing the interest rate goes, auto buyers in the future will have to carefully gauge the scenario before taking a call on the right option.

The financial aid office at the University of Maryland is busy before classes begin. So many students returning to campus are counting on financial aid to pay for tuition, books and supplies. College students feel the effect of the credit crunch as some private companies stop issuing student loans and others raise interest rates. Abhas Mathur student said “I think in today’s day and age, student loans are very important, there aren’t too many jobs out here that cover a full student’s expense for a college education, so student loans bridge the gap.”

Each year Paul Hassler consolidates the outstanding student loans to make one interest payment, but this year, he was told he couldn’t consolidate, and the new loan carried a higher interest rate. Paul Hassler is putting his youngest daughter through college. Paul Hassler also said “the cost of the loans was running me about $550 a month, but by not being able to consolidate would have move the cost of the loan up to almost $1,100 to $1,200 for our budget, it really just would have blown things out of kilter with us.”

Financial Aid Director Sarah Bauder the University of Maryland said the rules have changed and she also said that consolidation is no longer an attractive option, and she does not recommend it anymore. Hassler rolled the student loans from private lenders into direct loans funded by the federal governemtn rather than deal with $1,200 monthly payment.

The UAW, which has endorsed Democratic rival Barrack Obama, has pushed lawmakers to fund $25 billion in low interest loans for Detroit automakers to help cover retooling costs. Automakers have embraced the idea in recent months as a vicious economic downturn has shut their access to traditional financing. The UAW President Ron Gettelfinger critizized Republican presidential candidate John McCain on Monday for opposing government loans for Detroit automakers, saying John McCain “has slammed the door on any real support for the domestic auto industry.”

In McCain’s visit to Michigan last week he said such loans would not be prudent, adding he was worried about predicting failure on the part of automakers when they have made strides on things like labor agreements. He has proposed a $300 million prize for battery research and a $5000 tax credit for consumers who buy fuel efficient vehicles.

McCain said he was open to more direct aid for Detroit’s automakers, an opinion piece printed in the Detroit News. McCain’s proposals would do little to return jobs said Gettelfinger. Obama has backed a UAW proposal for Congress to approve $4 billion this year that would cover the costs for lending $25 billion, a plan that faces many hurdles to passages