The worldwide financial crunch is hampering those in the Central Susquehanna Valley who want to borrow money to buy a new car.
“It’s taken away the opportunity for any kind of loans,” said Robert Zimmerman, of Zimmerman’ Auto World, Selinsgrove.
Even so, sales have been “comfortably respectable” for this time of year, he said.
“We have the kinds of cars people want, and I think people are trying to move on after the stock market crash and the election,” he said.
A year ago, Zimmerman said, anyone could have walked into a showroom and had no trouble financing a new car at 100 percent and no down payment.
“Now we’re looking for down payments,” Zimmerman said.
An acceptable down payment is 10 percent of the purchase price, he said.
Financing that was available for anyone with a credit score of 500 or better is a thing of the past, and only those with a score of 720 or better qualify for the best rates today, Zimmerman said.
According to J.D. Power Associates, a consumer research and rating company, if your credit score is below 620, you may be required to put 20 percent down to qualify for a new car loan. In fact, if your score is below 550, you may as well forget getting a bank loan to buy a new car.
Your credit score isn’t the only criterion in determining whether you get a new car loan, Zimmerman said. Your income and other debts also play a role in your rating.
“We work with a number of banks,” he said. “Most of them have been generous, but they are conservative and are working under stricter criteria.”
“The customer has to have more down (payment) now,” he said.
Credit crunch time
Lending institutions in general have tightened up credit requirements, said Richard Grafmyre, president of FNB Bank in Danville.
“There’s a movement toward quality with respect to loans,” he said. “That means those with lower credit scores face more difficult approval and higher rates.”
Banks can’t afford to take on subprime loans any more, Grafmyre said.
“As credit scores go down, more of a down payment is necessary, since there is more risk,” he said.
For those who need wheels but have low credit scores or other credit difficulties, there are other options.
Brenner Car Credit, with dealerships in Mifflintown, Hummels Wharf and Williamsport, doesn’t even consider those scores.
“We look at your income versus your payments, including what your car payment and insurance would be,” said Monica Wert, general manager at the company’s Mifflintown office.
A deal can be worked out with almost anyone, Wert said.
A schedule of payments is created, based on the customer’s payday, and customers are expected to make their payments on time.
“We’re very strict on payments,” she said. “If you miss a payment or two, we get you in here for a talk and get you up to date.”
Brenner has been in business for 14 years, she said, and it has had few defaults. Some customers have bought several cars, and they bring in friends and relatives to buy vehicles.
“We have a lot of years of collection experience,” Wert said.
Brenner arranges its own financing, Wert said, and the going rate for all loans is 14.95 percent.
“We don’t do subprime loans, those 20 percent or more,” she said.
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