Auto Financing Industry Narrows Credit Requirements for Borrowers
Posted on August 24, 2022 by Rick Griffith
If you’re looking to buy a car, you may discover it’s harder to get an auto loan today than earlier this year. That’s because many of these market changes and financial impacts in the last few years have increased the cost of living. One factor is inflation.
With the steep rise in inflation, consumer confidence has fallen. Sparking The Fed to increase interest rates. Considered by some financial experts the most potent tool in the federal reserve board’s arsenal to slow inflation. But, despite The Fed’s efforts, other factors are at play.
Other Inflation Impacts
COVID-19 impacted supply chains around the globe. It wasn’t until the “stay at home” mandates began to lift that a significant shortage in automobiles emerged due to a lack of onboard computers in stock.
The fallout of that shortage was automobile manufacturers began to inflate the cost of new cars. That signaled the automotive industry was not immune to the impacts of the pandemic.
Unable to balance supply and demand, many car manufacturers flooded the semiconductor industry with orders for microchips, which were also in short supply.
Effects of Inflation and Rising Interest Rates
However, the effects of these changes are no surprise to consumers. Moreover, it is hitting consumers the hardest since financial institutions are narrowing credit requirements making it more difficult for consumers to secure auto loans.
On average, across the automobile industry, creditors increased a borrower’s credit score requirements by 26 points, which means if you’re looking for a used car loan, your score needs to be at a minimum of 669.
Even more alarming is that borrowers with scores between 501 and 600 account for only 15% of approved loans. While scores below 500 only make up 2% of approvals for car borrowers.
Used-Car Buying Solutions
These unfortunate times have changed the face of many industries, and the effects are funneling down to the consumer. Changing how we, as consumers, save money to adapt to a changing financial market. If you are one of many Americans denied credit for a new or used car in the last three months, there is a solution.
Talk with the team at Car Credit by calling (417) 624-8500. As a principal Buy Here Pay Here dealership for the four-state region of southwest Missouri, Car Credit funds loans directly to borrowers using their in-house approval process.
As a local car dealer headquartered in Joplin, Missouri, Car Credit extends lending directly to customers with a less than perfect credit score. Treating each customer’s unique financial situation individually, the team at Car Credit will evaluate your financial history beyond your credit score. Apply now to get immediate online approval today!
They will work with you to extend the funds needed to get you into one of their extensively reconditioned, safe, and reliable vehicles. To begin, start by looking through their extensive selection of sedans, SUVs, and trucks.