Auto Loans Changing Standards

With the change in the economy it became increasingly harder to score a new car loan because so many people were defaulting on the ones they had. The auto loan industry became afraid to give anyone a car loan who did not have perfect credit and was willing to do pretty much anything to get one. So in addition to a large number of defaults on car loans that were already out there, they stopped writing the majority of their auto loans, leaving the industry somewhat high and dry.

However, the auto manufacturers and auto loan lenders have since realized that this may not be the way to go if they want to stay in business. They are starting to see the error of their ways so to speak and are changing the standards that they have been enforcing for the past few years in relation to the auto loans.

They had increased the minimum allowable credit score on their car loans from 621 to 700 because they just could not get approval or funding for anyone underneath that mark. However, not only did they realize that they were having a hard time getting people in this economy with a credit score over the 700 mark, but they also found another funding source.

The new source was TARP and they told them that not only would they give them funding for car loans, but they would also allow them to reinstate the lower credit score of 621. GMAC said that they would use this money to help those that need one get an auto loan, but that they would also be responsible in who they gave it to. They said that they could relax with the constraints but they would not cease to be diligent in giving it to those who are best qualified to pay it back.





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