No Credit Check Auto Loans to Boom?

[Jul 19, 2010.]

 

Auto Loans and Credit Scores

Do you get a sick feeling in the pit of your stomach when you think about your credit report? If so, you're not alone. According to figures published July 13 by the Fair Isaac Corporation (the people behind the widely-used FICO® credit scoring system) slightly over a quarter of all Americans have credit scores below 600.

When AP writer, Eileen AJ Connelly, looked at the figures for MSNBC, she said that a sub-600 score marked people out as poor risks. And she reckoned that that 25.5 percent translated into more than 43 million people. Not alone? You're in a rapidly growing club.

The good news is that having poor credit scores doesn't necessarily prevent consumers from getting relatively cheap auto loans.

Auto Loans More Widely Accessible?

The day after the FICO figures were released, the Wall Street Journal ran a story about how some lenders are once again targeting subprime borrowers. And that included companies that provide auto loans. The Journal says that about eight percent of all auto loans made in the current quarter went to people with credit scores in the lowest range (which FICO says is 300-499). During the last quarter of 2009 that figure was 6.2 percent.

Of course, those with poor credit are unlikely to be offered the ultra-cheap auto loans that people with pristine histories can often get, but many may be pleasantly surprised by the affordability of some of the deals currently on offer.

Where to Find Your Auto Loan

J.D. Power & Associates calculates that 80 percent of car finance deals are applied for through auto dealerships. But some buyers have found--to their very considerable cost--that this isn't always the best route.

The New York Times carried a feature July 16 that highlighted just three of the many ways in which some dealerships scam--or at least gouge--their customers. This column has covered these before, but they're worth repeating.

1. Yo-Yoing. You've signed your credit agreement and driven your new car home. A week or two later, the dealer calls to say that the financing has fallen through, and you have either to return the vehicle or accept a higher interest rate
2. Marking Up. The dealer is given a wholesale interest rate by the finance company, and then marks that up to whatever he or she thinks you are willing to pay. The dealership then keeps the difference. The Center for Responsible Lending says that this practice alone costs American consumers $20 billion (yes, billion) a year.
3. Adding On. Dealers often add on options that consumers assume are compulsory. Check your agreement carefully and ask questions

Cheap Auto Loans Here

Of course, you can always avoid these sorts of problems by finding cheap auto loans--including no credit check loans-- here.

 

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.