As of 2010, auto loans are available, despite news reports to the contrary. Many people will have no problem getting an auto loan from the dealership or from their own bank. The terms of the loans may vary, but with some effort, you can find an acceptable auto loan. For those who do not qualify for these loans, there may be other special credit available to allow them to drive a reliable vehicle.
Credit Score
Your credit score is the largest factor in how easy it is to get vehicle financing. That three-digit number ranging from 300 to 850 controls the world of financing and lending money. If you have a credit score above 720, you are a top-tier borrower. Any auto loan should be available to you at a good rate. A study by the Consumer Banking Association says that half of all car buyers fall into this category. Tier B is a credit score above 680, and easily qualifies for most conventional auto dealer car loans,.
Length of the Term
The longer the term of the loan, the higher the risk. Thirty-six and 48-month loans are easier to finance than a 72-month loan because the loan is less likely to be upside-down at any given time, giving greater security. If your credit is in a lower tier, you may be able to get a loan more easily by financing with a shorter term.
Down Payment Amount
In the early 2000s, people routinely financed well over 100 percent of the value of the new vehicle, usually to compensate for negative equity in a trade-in vehicle. This is less common now. If you have top-tier credit, no-down-payment loans are readily available, You might even be able to finance some negative equity. If your credit score is lower, a higher down payment will probably make your loan look more attractive and make it easier to finance.
Other Options for Financing
If your credit falls below the 680 score, that marks the lower portion of "B" tier credit, you may still be able to finance a vehicle at a conventional car dealer. Compensating factors such as down payments can help. A dealership with a strong finance department can often make this happen more quickly. However, if you have current bad credit, or a credit score lower than 640, your options for conventional financing are more limited. You may need to seek financing at a buy-here-pay-here dealership. These dealerships either carry the note themselves or use special sub-prime financing with high interest rates. If this type of loan is your only option, try to get a solid, serviceable car that you have had completely inspected by a competent technician.
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