Automotive News

Posts Tagged ‘bank’

In today’s highly mobile world, many spend countless hours and miles traveling in their automobiles for work and vacation. Modern cars are also far more reliable than the cars of 30 years ago. We have begun to take them for granted. We expect them to just work day in day. However, the time to learn the lessons of basic car repair is not on a deserted highway at 2 am on the way up to the ski slopes! Automobiles still breakdown, have flat tires and batteries run out of juice. Most people think that you have to be a space shuttle engineer to even open the hood of a 21st century car. While it is true that computer technology has drastically changed the way engines and cars operate, there are still some basic car repairs that you can perform in a pinch. You must carry some basic automotive tools with you at all times in order to carry them out.

A basic kit with automotive tools doesn’t have to break the bank or require you tow a trailer full of tools. You can go as basic as you want and add more tools as your needs change. The first thing to do is put together a list of automotive tools that you will probably need. (I have included one in this article.) You will be surprised to find that you own many of them already. The real chore is to get them together in one place and carry them with you. You will also need something to carry them in. First see if you have an old duffle bag stuffed in a closet. If not you can probably get one cheap at an Army surplus store. Now it is time to look at our automotive tool list and start collecting them.

Automotive tools for your kit should include the following: set of various screwdrivers (both flat head and Phillips), crescent wrench, pliers, torque wrench, pocket knife, jumper cables, battery terminal brush, spare fuses, 1 quart of oil, duct tape, flashlight, gloves, medical kit, road flares, reflective vest, blanket and funnel. Make sure your car jack and tire iron are in their proper place in your car’s trunk. After you have gathered these items and put them in your old duffle bag, store it in your truck so its there when you need it. These items can prove to be invaluable to help you fix a minor problem and be on your way.

If you own an automotive property or are thinking of buying one, such as an oil change facility, collision shop or general auto repair, you’ve got to have you’re “ducks in a row” as they say, to get the loan closed in this market. 

Believe me I’m sick of hearing about it and sick of “warning” my clients.  But as the credit crisis persists, you need to start thinking clean.  In other words your loan requests have to be strong or you won’t be getting any term sheets from banks.  They’ll simply pass on your deal.  One of the more common issues is bad credit or mediocre credit.  6 months ago you could get away with a 620 and still have some good options.  Now you really need a 680.   Issues like late pays or an excessive amount of debt, even with good scores, will now kill most options.

Another common issue is so many automotive property owners don’t show enough income to qualify.  The idea on a bigger scale is to avoid as much taxes as possible, but when you go to get a loan, you’ve got a problem.  Whatever money you saved by not paying tax you’ll “pay back” to a lender in the form of a higher interest rate or by not getting a loan at all.  Pay now or pay later.  Tal to your CPA about this he may be able to help you create more noncash items like deprivation so that you can have the best of both sides – low taxes and a good rate. 

Bottom line, if you want a decent loan, you’ve got to show a decent amount of income in this market.  More exactly, you’ll need to hit a Debt Coverage Ratio of a 1.3, which has gone up from a 1.2 (some banks used to go down to a 1.1).  What this ratio means, is that you’ll need to show $1.30 of net income, for every $1 of proposed mortgage payments.  So after you pay all of your expenses and pay the mortgage you’ll still have $.30 left over…

Automotive property loans are still doable!  But you’re going to have to be more serious about pulling them off.  And (I’m not just trying to up sell you) you should be more concerned about if the funding bank is really going to close vs. picking one bank over the other  to save 10 basis points on your rate.  Prepare in the beginning and have your loan package look as clean as possible BEFORE you submit it to a bank.  You don’t want to have to “explain away” a single item if you can avoid it.