The History of Auto Loans
Being around since the early 1960’s, an auto loan has greatly evolved over the past five decades. When the auto loan was first introduced to the American population, potential buyers were required to put down a payment of at least 50% of the cars total value. In addition, anyone that received an auto loan during this time period would be required to pay the loan back in full within 12 months. For obvious reasons, financing a vehicle over just a 12-month period is no longer possible.
Needless to say, the auto loan process and standards have come a long way since then. Mainly due to the high increase in vehicle costs, auto loans can now be financed over a 60-month period. In fact, some auto lenders will even allow you to finance a vehicle longer than 60 months. Because cars are so expensive nowadays, it would virtually be impossible for anyone to receive an auto loan based on the old lending standards. Without reinventing the auto loan industry, virtually all car manufacturers and dealerships would not be able to stay in business.
Another auto loan factor that has changed over the years is the various lending programs that have been developed. By now providing extended term options, car buyers are able to be selective when it comes to purchasing a new or used vehicle. In the 60’s, people were only able to receive a car loan that was within their financial budget due to the required down payment amount and the life of the auto loan. Now benefiting both the auto industry and individual buyers, car loans are easily more accessible than ever before. Further, one of the most important determining factors in regards to receiving an auto loan is an individuals personal credit score. Although people with a low credit ranking are still able to receive an auto loan, the total financed amount will be much higher due the applied interest rate. In order to keep the interest on your loan as low as possible, you should absolutely make sure that your credit score
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