Alternative online lenders, such as peer to peer, offer a positive alternative for the borrower with poor credit.
Record auto sales
Need a loan for a new or used car? You are in good company. According to statistics, the auto lending industry is booming. In a recent Wall Street Journal article, it was reported that auto loans have hit the $1 trillion dollar mark. Approximately $119 billion in loans were issued just in the second quarter. Auto loan debt is now even with student loan debt, both at $1 trillion. During the second quarter of 2015, of all new car purchases, 86 percent were through financing. Fifty-six percent of used car purchases were financed.
Sticker prices are climbing too. The average car loan is a little more than $28,000, according to “State of the Finance Market” a report from credit reporting giant Experian. The loan periods are also increasing—as much as 67 months in some cases according to Experian data. And, you guessed it, monthly payments are also rising, even though the loan terms are lengthening. New car loan payments are averaging $483 per month, and used cars around $361, an increase of 2 percent from last year.
All of this is great news for the auto industry and banks, but what about for you, the borrower that no bank wants to talk to, or the one subprime lenders love to talk to so they can have you paying for your new car until you enter the retirement home?
In 2006, according to New York Fed statistics, almost $650 billion in auto loans were made to borrowers with credit scores below 660. Beginning in 2010, the number of subprime borrowers—those with credit scores 600 and below, began to drop, with loan originations around $150 billion. Experian Automotive reports that in the first quarter of 2015, the average credit score for borrowers was 713. In the meantime, a sub-prime auto financing industry has come to life, offering borrowers unable to obtain conventional financing the opportunity to drive that car off the lot. But it comes with penalties. The pages of newspapers and magazines are filled with stories of car buyers suffering through years of car payments and sky-high interest rates that surpassed even the period of use of their vehicle.
Your credit score is not 713! Is there an affordable auto loan option for you?
Yes. Alternative online lending platforms, such as p2p lending, is tailor made for you, the borrower with a less than stellar credit report. Here is why:
√ The borrowing process is conducted online, where just about everything is taking place today
√ You can apply even if your FICO score is 600
√ You will have an answer to your application right away and the funds are disbursed on time
√ There no undisclosed fees and interest rates are reasonable
√ Your personal auto loan is repaid through easy monthly payments that are deducted automatically from your bank account
√ You can pay off your personal auto loan early with no penalty
Here is another great reason to apply for a peer to peer personal auto loan—an auto loan can be a great way to rebuild your credit history!
First of all, a person auto loan from a peer to peer lender is a personal installment loan. Since the monthly payments are automatically deducted from your bank account, this will be reported as on-time payments, improving your credit rating.
Need to buy a car and your credit is not good?
Alternative online lenders are a safety net for borrowers who are shut out from banks and credit unions due to their credit ratings. But even more, the peer to peer industry is people loaning to people. The online lending platform has become hugely successful throughout the world, resulting in significant increases in investment cash, meaning more loans available to assist borrowers like you. Even when your credit rating is not good, you may still qualify for a personal auto loan from a P2P lender.