About a year ago I thought I made a wise financial decision. I traded in my gas-guzzling sports car for an older model SUV. I only had to take out a small loan to finance the car and my auto insurance dropped to $68 from $189 each month.
I thought I was being smart. I was wrong.
The SUV I purchased started having problems two months after I drove it off the lot. Since then, I've fixed one expensive problem after another in the car. On average, I've spent more on repairs than I've save on auto insurance since I downgraded to an older vehicle.
I just don't think the SUV is worth the hassle (or the expense) anymore. So I paid off the loan and planned to just not drive more than I had to for a while. But a recent article by MSN Money has me reconsidering.
According to MSN Money, the average credit score borrowers had when they financed a car dropped in 2012, almost to pre-recession terms. On average, consumers qualified for a loan on a new car with a 760 credit score. Consumers qualified for a loan on a used car with an average score of 659. While those borrowers had to meet other requirements - such as having a down payment and proving their income - its still a sign that auto loan requirements are loosening up.
The easier qualifications aren't the only good news. Auto loan rates are improving too. According to MSN Money, auto loan rates for new and used cars have dropped to 4.56 percent and 9.02 percent, less than what I paid for my last auto loan.
The credit qualifications and the loan rates have gotten a lot easier than when I first considered getting a new auto loan in 2011. While I qualified before, I only qualified for a higher rate then I wanted to pay, but I when I went back just a few months later the rate was lower. Now, the rates will be even lower.
I plan to trade my clunker in and apply for a new loan. And I'm hoping these easier qualifications are just the beginning. After all, I can't be the only one driving around a ten-year-old vehicle hoping to upgrade. Maybe if the rates continue to drop, more people can afford to upgrade their vehicles and pump money back into our economy. It would certainly make me feel better to know that more consumers are willing to borrow again. I'd take it as a sign that things are finally turning around in this horrible economy.
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