Car Loans Still Available Through Dealers

November 10, 2008

It seems as though everything from higher gas prices to the mortgage crisis are being blamed for the declines in auto sales, yet according to some car dealers there may be another reason for the decline, one of perception.

The current perception is that financing is simply unavailable for would-be car buyers and discourages consumers from visiting dealerships across the United States. This means that many Americans believe that they cannot get financed, but, in fact, the opposite may be true.

One dealer put it this way: “Right now all the media blasting says that it’s impossible to get loans. That doesn’t seem to be the case… There’s no shortage of cash but a shortage of people. The amount of customer flow has been shortchanged because of the media telling people they can’t do anything right now.”

At the same time, the auto loan financiers have taken up stringent policies regarding the loans that they do offer. Consumers of every credit level can still access auto loans, but not without meeting some conditions, such as higher down payments.

Major auto financiers like Ford Motor Credit Co., Hyundai Motor Finance, BMW Finance and Mini Cooper Finance have all been making strides to keep financing open for potential customers. These companies have maintained their credit policies in the face of the crisis; yet, not all have.

As of October 13, GMAC Financial Services announced changes in its financing policies that would limit the amount of people who were eligible to receive financing. The criterion was based on a minimum credit score of 700. Additionally, contract limitations, advance rates, and term lengths were also effected.

The reason for these changes has to do the costs of funds borrowed by finance companies from the markets. With higher costs come obvious price adjustments in order to maintain a line of credit or auto loan financing.