Used Auto Financing Companies

Since the fall of the financial markets in September of 2008, many auto finance companies have halted their subprime used auto financing programs. With good reason, a recent report by Experian™ reports that delinquent auto finance loans rose over 20 percent during the last year.

Over the past decade many lenders starting offering generous auto financing terms to customers needing secondary auto finance. It was quite common for used auto finance terms of 72 months for people with subprime or little credit. These extended terms caused car buyers to be in a negative equity position for a longer time. As a result, many borrowers simple gave their cars back to the auto finance company when they came across financial difficulties. As the delinquencies rose, many national auto financing companies simply went out of business.

In House Auto Dealer Financing

Subprime auto financing primarily came on the seen in the 90's. Prior to that time someone with bad credit was limited to in house auto dealer financing. This type of financing is typically for a vehicle valued at less than $5,000 with 36 months or less to repay the loan. Many of these loans required weekly payments instead of monthly payments offered by traditional auto loan financing companies. A year later, in September 2009, we are seeing many secondary consumers turn once again to in house auto dealer financing.

Subprime Auto Financing

It is true that there are still a handful of auto finance companies offering special financing auto loans, but the fact is there are far more consumers with bad credit than there are lenders with money to lend to them. So over the last year, we have seen lenders require more money down, advance less based on the value of the car, and shorter repayment terms for credit approval. Although this may not, a first glance, seem good for consumers and the used auto industry, over time it will prove to be a good thing. If you have bad credit probably a good idea to get a loan you can comfortably repay quickly.