Auto Loans Tighten
April 2, 2008
Many experts would agree that it was just a matter of time before the auto loan industry saw problems just as the home mortgage and credit card industry are seeing.
Greg McBride, who is a senior financial analyst for Bankrate.com, recently said that many auto lenders are requiring larger down payments on loans. He went to say that credit requirements for auto loans are somewhat mirroring the type of changes for home loans. In general this means auto lenders will be looking for higher credit scores and larger down payments in order for consumers to qualify for auto loans.
As an example of what this means to consumers, Turner Acceptance Corp., a sub prime auto lender that offers loans in Illinois, has recently beefed up its due diligence policy in reviewing loan applications. In the past, the Chicago-based lender typically worked with first-time borrowers or customers with poor credit scores.
One of the more recent changes at Turner Acceptance is an increased due diligence process in how it reviews applications. This often involves additional cross-checking on all parts of a loan, including income levels and references.
Another issue facing auto loan lenders is that many consumers simply have less cash to use as down payment money due to increased costs elsewhere, such as credit card bills and higher home mortgage payments.
The good news is that those consumers with good credit histories will be getting the best deals possible as competition for their business increases among the auto lenders.