Lenders are now making it easier for consumers, even troubled ones, to obtain new financing across nearly all types of credit, and that is true even for smaller banks extending car loans.
Recent data shows that credit qualifications for auto loans across much of the lending industry have slackened considerably, and now the same is true for smaller financial institutions as well, according to a report from Credit Unions Online. Many consumers are seeking financing from smaller lenders to not only obtain new cars, but also in attempting to refinance their existing loans.
This has been especially true for credit unions because, in general, the standards they have are different from those of larger institutions, the report said. The goal at these smaller lenders is to extend credit to as many subprime consumers as possible to help them get back on their feet financially.
“We look at the entire financial profile of a borrower, not just a credit score,” Terri Larson, vice president of lending at Highmark Federal Credit Union in Rapid City, South Dakota, told the site. “Other institutions may be loosening their guidelines once again, but from the credit union world, our business model will always support helping as many of our members as possible with affordable financing and excellent service.”
Larson went on to note that the lender’s increase in loan activity has come because many consumers with borrowing histories of all kinds now believe the economy is improving and want to take advantage of interest rates that are hovering near record lows, the report said. However, that belief in the improving economy is driving greater demand for new cars, and that in turn means that many consumers may not be able to find the automobile they want regardless of their credit standing.
As a consequence, many consumers are now doing more to make sure they are financially ready to buy the cars they want, which in turn is likely to reduce instances of delinquency and default on this financing, the report said. It’s believed that this trend will keep late payments to a minimum for some time.
As with auto loans, credit card issuers are also opening up new account offerings to those whose credit ratings took a hit during the recent recession.
Image: Miala, via Flickr