I've long tried to be a subscriber to chaos theory. Chaos theory, loosely explained, is to say that everything in the world is connected; there are no random occurrences. A familiar analogy that is used is, "A butterfly flaps its wings in China, and it starts to rain in Central Park."
I've never been able to fully commit myself to the notion that everyone, and everything, is connected, because it just seems too complex. There are certain things that just seem impossible to connect with a straight line. One auto finance company is trying to connect the threat of a U.S. fiscal cliff and subprime auto finance loans.
The fiscal cliff is the combination of a number of different changes that, when group together, could have a very negative impact on the U.S. economy. The changes include expiration of a number of tax cuts, spending cuts, and a reduction in the deficit.
I've seen late-night TV talk show hosts try to tackle the topic. Poorly. I've read posts of friends on Facebook who share those silly eCards and infographics that try, weakly, to inform and persuade. But I haven't, until recently, seen an auto finance company share its thoughts.
If the federal government ends up taking a leap off the fiscal cliff, economists expect a recession to occur next year. That has led one subprime auto finance company to predict that borrowers with less-than-perfect credit will find it much harder to obtain financing for car purchases.
Now, the auto lender in question, AutoDrive1 and MatrixLoanProcess.com, are using this very important development as an opportunity to convince borrowers to get a new car loan before this fiscal cliff issue reaches a climax.
The movements and changes that will determine whether the U.S. is able to avert driving off a fiscal cliff are complicated and constantly changing. The federal government is trying to effect a solution, with the media reporting daily on changes and updates. The topic is difficult for many to understand. Perhaps even more so for someone who has less-than-perfect credit. There could be any number of reasons why a borrower's credit score drops, but certainly one possible explanation is an inability to manage their own personal finances.
Understanding the intricate complexities of the federal budget and tax code would certainly lie beyond the grasp of many who are unable to manage their own financial situation.
That is a long-winded wind-up, to me, saying that using the fiscal cliff as a marketing tactic may not be the most effective way to originate more loans. While the logic behind the idea is solid, the underlying event is far too arcane for most people to care about.
AutoDrive1 deserves credit for generating exposure by promoting its loans to people who might not be able to obtain financing if a resolution is not reached before the end of the year. And while I'd love to hear otherwise, I'm skeptical that the release led to a dramatic increase in applications.