Financing An Auto Loan
After years of easy credit, no money down, 0 percent financing, and easy leases with low monthly payments, buyers in the American car market are having a bit of a rude awakening when it comes to auto loan financing.
This is the first time in many years that there are a significant number of car buyers who have concerns about qualifying for an automobile loan.
There are many financial experts who are warning car buyers that banks and other lending institutions are not going to be offering attractive and easy to get loans for many years.
On the other hand, there has never been a better time to buy a brand new car, as dealerships are struggling to clear out the glut of automobiles on their lots. Especially on domestic models, car buyers can find discounted prices, even employee pricing, rebates and dealer cash back offers that make a new car purchase a very attractive proposition (be aware of car buy-back programs though).
And financing may be more difficult to obtain, but it is certainly not impossible to get. It may just not be the easy money that was available in the past.
While some people will try to pay cash, for most people, cash for a new car is an impossible dream.
Dealers are positive about the ability of consumers to get financing, if they are in the average risk category.
Those who are high risk: carry high debts, have a history of not repaying loans, have filed for bankruptcy, have no or very low income, or have high debt to income ratios – will have more difficulty getting a loan.
However, those with a regular job, a mortgage on a home that is being paid regularly without late payments, and you pay your bills on time, there are many lenders who will give you an automobile loans.
The terms of the loan may not be as generous as they have been in the past. Overall, interest rates on automobile loans have gone up, and there are fewer low and no interest rate loans available.
Still, credit unions , banks and online lending institutions offer rates that are generally better than those offered by dealers, and they do have money to loan. They will be more vigilant in their underwriting review and their verification of income than they have been in the past, but if you can stand up to that scrutiny, then the results can be rewarding.
Those who have blemishes on their credit record or no cash for a down payment will have a hard time finding financing at a bank or even a credit union.
They may be the perfect candidates for dealer financing. While dealers will not make the risky loans everyone was making 4 or 5 years ago, they do have money to lend. More importantly, they are anxious to make any sale of new cars that they can, so they are very likely to work hard at finding a customer a loan.
So when shopping for auto loan financing, remember to do your homework and have your facts straight, then find the best terms to get your great new car, complete with solid financing.