When recession hit, American consumers experienced the worst time to buy cars. This is because the stringent requirements have pushed the needed credit score to at least a 776. This was the credit score that only a few can afford to have with the economy going down, along with everything else. But that tough time is now just a part of history as the auto loan industry has become friendlier to potential borrowers. From the credit score requirement of 776, the minimum is now at 760.
According to Experian Automotive, there are more buyers with bad credit scores that are approved today than during the recession. Hence, now is a good time to buy a car.
Still from Experian Automotive, the information that they have has it that as of the first quarter of 2012, buyers with a credit score as low as 760 have been approved for loan for new cars while used car loans require a minimum score of 659. Because of this huge adjustment in basic criteria, bad credit loan lenders are writing 11.4% more loans each day.
In addition, buyers are getting approved for bigger amounts than usual. Bad credit loans for new cars are now at $30,000 while used cars are getting an average of $17,000 worth of loans. These amounts are $589 and $411 higher than before.
Yet another strong factor that has encouraged the auto loan industry would be the low interest rates offered by most bad credit loan providers. This would mean both the online and traditional lenders. Further, the longer loan terms have made payments even more affordable.
These encouraging actions from the creditors have led to a decrease in the number of late payments. According to the reports gathered borrowers who were late with their payments by 30 days dropped by 7.6%. Hence, lenders have more money to lend with losses at low levels.
What To Remember Before Securing Auto Loan Deals
Whether you are applying for auto loans from online and offline firms, you should remember to always read the fine print. There could be hidden charges or special requirements for discounts and other perks (if there are any). It is important that you be well versed in how the transaction goes. This will also reduce any chances of unpleasant surprises later on.
Because credit scores are no longer as big deals as before, you no longer have to be ashamed of your credit history. In fact, if you are lucky enough, you might even find a bad credit loan lender who does not perform any credit checks at all. Instead, employment verification will only be done on you.
Also, it is best that you look for a bad credit loan first before you go to the dealership. This will help you come up with a price range that you can work with. At least, you will be able to see all vehicles based on their value and not see the value first then the vehicle last.
The combined efforts of all lenders, auto dealers and car makers have made it possible for the auto industry to regain its strength faster than any other section of the economy.