As the American industry continues to rebound, and American dealers start to re-stock inventories with new 2012 models, there’s also news that some of America’s biggest lenders are getting a bit more expansive with their auto loan programs. One part of the equation that we’ve been asking about lately is the consumer’s ability to buy. Even with more cars on the market, and Japanese auto makers recovering from crises earlier this year, it makes sense to evaluate how American drivers will be able to afford new or late model cars in this economy.
New reports from news agency Reuters show that some major established lenders, including big banks, are starting to provide more auto loans to the huge percentage of the American population who are considered subprime. Subprime borrowers are individuals with a credit score under a certain benchmark, usually around 660 or 640. There are many reasons that someone can be considered subprime, and many of them are the same kinds of events that have happened to a greater segment of Americans in the last few years: unemployment, foreclosure on a home, lowered income causing critical budget problems, and any kind of default on credit.
The move to embrace subprime auto loans shows that lenders are serious about meeting customers halfway. The cynic would say that this is simply motivated by necessity; as banks run out of wealthy folks to lend to, they will need to find common ground with the subprime community. But this is also good news for those who really want to finance part of a new or used car purchase. Consumers should see lenders ease up on auto loan restrictions in the months to come, which means better chances for American individuals and families visiting dealer’s lots. There is a disclaimer to be made here: even though big lenders are becoming a bit more generous with their lending, individual dealerships might still hold their cards close to the vest and try to get higher interest rates, even from those with pretty good credit. That means for the best results, it’s critical to shop around to different lenders to figure out what you qualify for, rather than just accepting the first financing deal that comes along.