Here’s Why Banks are Making it So Hard to Finance a Car in 2017

For years, banks have been making it super-easy to get a car loan.

Not anymore.

Because of rising interest rates and auto loan delinquencies, lenders are tightening their standards and getting choosier about who they give credit to.

That’s a real downer for vehicle sales in the U.S. In fact, sales plummeted to a two-year low in March.

“We’ve been having a party for a few years and it was fun,” auto industry consultant Maryann Keller told Bloomberg News. “Now lenders are getting back to basics.”

This isn’t good news if you’re looking to buy a car. But never fear.

Here’s What You Can Do to Score a Car Loan

You can still get a car loan — and a decent car — if you follow our advice.

For starters, know your credit score before you head to the dealership or used car lot. Most car buyers don’t know this, but it gives you an immediate advantage.

A good credit score is a powerful negotiating tool and can help bring down a car’s price, interest rate or monthly payment. Take a look at our credit score explainer, and use some of the resources we mention to get your score for free.

If your credit score isn’t great, follow this guy’s example — he raised his score 234 points in seven months.

Finally, think used. Used cars are often a better deal. Thanks to the law of supply and demand, 2017 is a good year to buy a used compact car, even though used car prices are going up on average.

For more tips on buying a used car, go here or here or here.

Because of the tightening standards for car loans, we’re likely going to see car buyers move away from expensive new vehicles and gravitate toward cheaper used cars.

So if you end up settling for a vehicle that’s not quite your dream car, don’t worry: You’re not alone.

Your Turn: Are you planning to get a car loan this year?

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He’s still paying off the loan for his latest used car, thank you very much.

This was originally published on The Penny Hoarder, one of the largest personal finance websites. We help millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. In 2016, Inc. 500 ranked The Penny Hoarder as the No. 1 fastest-growing private media company in the U.S.

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