If you have less than perfect credit and have been wanting to purchase a new or used car, this may be the ideal time to start shopping! According to an Experian Automotive report, the sales of new and used cars to customers getting subprime loans has increased.
Subprime loans to customers purchasing new cars increased during Q3. This puts these loans at 25% of loans for all new cars. Used car loans at subprime rates are on the rise, becoming over 54% of the loans made for used cars.
As the economy continues to change, consumers are becoming more willing to make large purchases. Lenders are willing to take on a little more risk by approving more subprime loans. The affect of all this is that the new and used car market is open to more consumers.
While the market is far off from where it was a few years ago, changes in lending trends are helping to get more people into new and used cars. The credit scores required for new and used car purchases are lower than this same time last year. There is also an increase in the amount of money approved for both new and used car loans.
Some of these increases are due to changes in spending habits. Late car loan payments and repossessions have both gone down. The goal of lenders is to move auto inventory and to do that they need customers. When there are reasons for lenders to be more positive about the market, they will extend the subprime loans to more people, generating more sales.
The availability of new and used cars to consumers with subprime credit is still influenced by the brand and model. For example, Lexus and Lincoln require a higher credit score to get you into a new car versus a Dodge or Chrysler product, which only require the lowest scores.
With a little research on brands and subprime lenders, this could be the time for you to show your consumer confidence by purchasing a new or used car.
If you have reservations about shopping online for car loans, this article is for you. Here is a brief overview of what shopping online is like, and what you can expect.
Is shopping online safe?
Although internet scams abound, shopping online with a reputable company is completely safe. There are certain things you should look for when examining a company's website. First, look over the grammar and spelling on the site. No legitimate company will permit bad spelling or grammar on their site. If you see a homepage with numerous spelling errors or unnecessary capitalization, it should send up a red flag. Another thing to look for is whether the website displays the Better Business Bureau emblem. Companies that are accredited with the Better Business Bureau can generally be trusted. Finally, no legitimate loan company that is trying to earn your business will ask for money up front before they provide the service for you. In most cases, the company will be compensated by the lender that they match you up with, therefore you should not have to provide any money of your own.
Couldn't I just go to the bank myself and get a quote?
Yes you could. However, when you're shopping for a large purchase such as a car loan, it's smart to get multiple quotes from people, to make sure you are getting the best deal possible. A difference of a couple percentage points on your interest rate could mean a savings of several hundred dollars over the course of the loan. You could go from lender to lender to get numerous quotes, but shopping online provides a faster way to get a good deal. The online company will act as a liaison between you and the lender. They will match your application up to the best options possible, which means you spend much less time shopping for a great loan.
What if I have questions?
While the initial process is done online, in most cases a representative from the online company will get in touch with you by phone. They will hold your hand through the process and be there to answer any questions you have. In this way, the online loan process still has a human factor.
We would encourage you to include online loan sites such as Carloan.com in your car buying plans. You might be pleasantly surprise at how competitive your loan bid from an online company will be.