Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, July 15, 1993                   TAG: 9307150080
SECTION: BUSINESS                    PAGE: B-8   EDITION: METRO 
SOURCE: STEPHEN FOSTER STAFF WRITER
DATELINE:                                 LENGTH: Medium

BEWARE CAR LOANS; THEY'LL TICKLE YOUR SPENDING BONE

For various reasons, we're buying more cars than we have in three years.

And stiff competition means bankers will duel with each other to make customers' money go farther.

Roanoke Valley banks are offering 48-month auto loans at 7.4 percent interest for new cars; rates are slightly higher on used cars.

"Frankly, it's hard to comprehend that the rates have gotten this low," said Dominion Bank consumer credit sales manager Bob Paynter. "There's no doubt it's a premier time for consumer loans."

While banks are posting rates of 6.49 percent to 8.25 percent, their numbers aren't set in stone. And car dealers say competition among lenders is helping people buy with lower monthly payments.

"We're blessed with a a very competitive structure of banks around here," said Carl Hart, vice president of Hart Motor Co. in Salem. "The competition's made them loosen up and made them go the extra step."

While dealers say their sales are up, it's more because people have driven their old cars for so long during the recession that they have no choice but to trade them in now.

Drivers in the past were trading cars every three years; the average age of a car now is 8 years, said Rick Johnson, sales manager at Roanoke's Magic City Ford.

"A lot of these cars are just completely shot," he said.

Roanoke Valley dealers sold 741 new cars in May, the latest available figure from the Virginia Automobile Dealers Association. That's 54 percent more than the 482 vehicles sold in May 1992 and the highest monthly total since September 1990, when 724 cars were sold.

Year-to-date sales totaled 2,715, up 7.5 percent over 2,526 a year earlier, the association said.

The average customer puts as much research into financing as he does into the car itself, said Curtis Allred, general manager at Rick Woodson Honda in Roanoke. Low financing cost is not what pulls buyers to the showroom, but it helps close the deal, he said.

The thinking usually goes, "Is this the car I want to buy?" and then, "How much is it going to cost me?" Johnson said.

Once a customer has decided on a car, getting the lowest monthly rate becomes the priority and he or she generally looks to the dealer to help.

Most dealers - who often can negotiate lower financing than individuals - shop with several banks, which offer various deals based on each customer's credit. The system is flexible.

"Banks are really looking to make loans," said Crestar Bank spokeswoman Cheryl Jenkins.

At least one bank, Central Fidelity, has begun lending at a quarter percentage point below the rate offered by the buyer's bank, said Monty Plymale, a vice president.

Whether the rates will go any lower is anybody's guess, the bankers said. But for now, "If you're thinking of borrowing money, this is an ideal market to do so," Plymale said.

So say the car dealers, too.

"They'll [the banks] get into a little battle trying to get that business," Johnson said.

"It's great for the customer."