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Securing an Auto Loan in a Tight Credit Market |  |
It’s no secret that lenders are very hesitant to write new loans at present. Finding sources of lending is incredibly difficult and even those individuals who have excellent credit may feel like lenders are being very particular about their customers in ways that are almost a reverse of the norm. Those wishing to secure funding for a new car at present face both a challenge and an opportunity. Lenders are not lending as much as they have been in the past few years but, at the same time, the prices of autos have been steeply discounted to accommodate a slowing demand.
To secure funding in such a tight market, consumers have to demonstrate responsibility to creditors more than was the case just a few years ago. When credit was loose, having a bit of debt on one’s report was almost a good thing. Creditors, it is now known, were actually taking rather unreasonable risks on the money they lent out and, of course, that led to the spectacular crash of the housing market that marred 2007. Today, with creditors more cautious, consumers have to show that they’re not looking for another spending spree.
Those with excellent credit should have little to concern them. However, those whose credit is less than perfect will have to work even harder to get funding. At the same time that this tightening credit market is in effect, there are some excellent values available in the car market; deals that actually make the higher-end cars affordable to anyone, provided they can get the loan. At the present moment, the less debt one carries the better in the eyes of lenders.
One can start the process of increasing their chances of securing funding by doing a bit of work on their credit rating. First and foremost, individuals need to get the black marks off their report as, in this tight market, those are most certainly disqualifications for any lending. Generally, it’s best to start with the oldest items first and, provided the debt is still valid—they do run out in some states and one can simply have the entry stricken if this is the case—one should make arrangements to resume payments on those debts. Fixing these smirches can go a long way toward securing financing for an auto successfully and, of course, they can force one to be more realistic about how much additional debt they can handle.
There are some lots and lenders that specialize in those with poor or no credit and they may be a good option depending upon one’s needs. If the vehicles are of a high enough quality to justify the sticker price, these lots can be excellent resources. However, with so many regular lots dropping their prices to such an extent, it rather makes sense to raise one’s sights a bit and to go for the best car that one can realistically afford.
The number one ally one can have in securing auto financing is a substantial down payment. Given that individuals have rediscovered the joy of saving, rather than spending, money, creditors may be able to look forward to lending to individuals who have more capital on hand and who need smaller loans which are much easier to pay back. In the current market, those individuals who can demonstrate the wherewithal to come up with a good portion of the sticker price for a new vehicle should be able to secure the remaining amount with little difficulty from most lenders who are looking for solid, reliable clients with whom to do business.