Car Loans Still Hard to Get, But Getting Easier

With summer’s historically busy car shopping season almost here, dealers are hoping consumers come to their showrooms and actually buy a vehicle. The hurdle that could turn potential car sales into no’s is credit and the availability of auto loans, The Detroit Free Press reports.

Although car loans and auto leases are becoming more available compared to a year ago, the auto finance faucet isn’t completely turned on yet. Freep points out that the securities market for bonds backed by auto loans and leases has been gaining steam, and more money is becoming available to give consumers auto loans and leases.

Jeff Schuster, executive director of global automotive forecasting at J.D. Power and Associates in Troy, said auto sales for 2010 will be greatly influenced by how much auto finance credit is available and how much it loosens up.

"It may be easier to get a loan maybe later in the year than it is now," Schuster told The Detroit Free Press.

2010 Ford Taurus

Although auto loans and leases are a little easier to get now, consumers should still be prepared before they apply for auto financing to buy their next vehicle.

Consumers should be able to buy cars, Schuster said, because leasing is more available than it was a year ago, the economy has gradually improved and vehicle owners may get more money for their trade-in vehicle now.

Schuster explained that many consumers may not owe as much on their car loans as they did a year ago because they’ve kept the vehicle longer and have continued making auto loan payments. This means they won’t be as upside-down on the auto loan as they were before, which will help them when it’s time to trade the vehicle in at the dealership.

If you plan on buying a vehicle this summer, remember that auto lenders are looking not only at your credit score, but your income, how much debt you have and several other aspects of your auto-loan worthiness. Also, if you’ve saved enough money to put a 20 percent down payment on the vehicle, you will look like less of a risk to the lender, which will increase your chances of getting approved for the car loan.