Credit Score Only Fair? A 7-Year Loan Could Work for You

The new Volvo XC90

An interesting trend in automotive financing could affect your ability to buy a new car. To take advantage, you’re going to need fair (but not good) credit and be willing to stretch the duration of your loan up to 7 years.

As outlined in a recent Automotive News article, auto loans lasting 84 months or more are currently finding both advocates and opponents in the automotive-financing world. Lenders opposed to the longer loans feel consumers with fair credit are buying too much car and are therefore more likely to eventually default.

Turns out, according to Equifax data quoted in the article, these 7-year loans are the least likely to end in default among consumers in the 630-to-680 credit range, which is considered “fair” credit.

Continue reading >>>

Subprime Loans Are Back: More Cars for People Who Can’t Afford Them

Subprime car loans

Maybe we didn’t learn our lesson the first time around.

Maybe lending to people who represent a large credit risk is just the American way. Maybe we’ll just keep cycling through economic ups and downs, recessions and recovery, because we can’t seem to understand that building a recovery on shaky credit will never end well.

People need cars, though, and sometimes they just don’t have those perfect 800 credit scores (or even a reasonably healthy 650) to open a credit account and secure a loan for a pricey new or used car. Of course, it would be better if someone just saved up cash, searched the CarGurus used listings and bought the car that was priced right. Instead, they gobble up offers by banks to finance a $20,000 car when buying a $5,000 car for cash would make more financial sense.

A story at The Detroit News had this scary quote:

Continue reading >>>