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Auto loans for subprime borrowers easier to get

[Sep 26, 2011.]


Countless Americans now have damaged credit reports. Some of them found their credit scores plummeting because of their own past irresponsible behavior. But many are in a difficult position through no fault of their own, perhaps as a result of unforeseeably protracted unemployment or illness. Regardless of their experiences, there's a much better chance of their being approved for auto loans now than there has been for a very long time. And that goes even for those who need no-credit-check loans.

Auto loans for (almost) all

Dealer Marketing Magazine is a trade journal aimed at those who own or work for car dealerships. Last week, it ran an article that urged its readers to gear up for a "boom" in subprime (it prefers the euphemism "non-prime") auto loans.

Such a boom would be good news for those with credit scores in the 550-to-675 range or even lower. Last year, Edmunds Auto Observer quoted data that showed that in July 2010, only about 9 percent of consumers with poor credit saw their applications for auto loans approved. Think that's bad? In 2009, the same number was just 5 percent, which is amazingly small when you remember that, immediately prior to the credit crunch, around 60 percent of subprime applications for car finance were approved.

There's probably a long way to go before we see that sort of percentage being approved again. And, of course, it might be better if such a dizzying figure were never to be seen again. The last thing any of us needs is another credit bubble waiting to burst.

However, there must be huge numbers of fundamentally decent and responsible Americans driving around in old cars with poor fuel economy that are costing them fortunes in gas and repairs. How much better it would be if they could spend that money on payments on auto loans for newer, more efficient and reliable vehicles.

Time to check out auto loans?

Back in the spring, The New York Times suggested waiting until fall before checking out car deals. Well, fall officially started last Friday, so now could be a great time to start exploring your options.

However, before you do, it may be a good idea to get a copy of your credit report so you know the shape it's in. Check it carefully for errors (the chances of there being one or more are probably much higher than you think), and follow the Federal Trade Commission's advice for correcting any that you find. If there are any continuing black spots that are fixable, then do so before you make any application for credit.

Once you're ready to proceed, be sure to shop around for the best deal, and certainly don't rely on your dealer to find your ideal finance. Check with your bank or credit union, and find competitive quotes for auto loans online.


About Author:

Peter Andrew has been writing about -- and for -- business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.

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