Companies that enable financing of vehicle purchases make life easier for millions of Americans every year. Just about everyone is familiar with how banks and financing companies operated by manufacturers extend loans that make car, SUV, and truck purchases possible.
Another type of lender, though, plays an equally important role by serving a different type of vehicle buyer. Lenders like Consumer Portfolio Services focus on catering to the needs of people who might otherwise not be able to finance their vehicle purchases at all.
Obtaining a Car Loan Can be More Difficult Than Would be Hoped
Automotive loans are considered less risky than certain others, but still more vulnerable to default and similar problems than many lenders would like. Unlike with credit card trade lines, automotive loan arrangements always include the use of collateral to help reduce the risk faced by the lender.
That is still not enough to make many would-be car buyers qualified in the eyes of lenders like retail banks, however. Even a couple of relatively minor problems with a person’s credit report can put automotive financing out of reach.
This is particularly likely for borrowers who hope to buy pre-owned vehicles instead of brand-new ones. Even though many such cars and trucks are of very high quality, an existing history of ownership adds unwanted uncertainty to the equation, as far as many borrowers are concerned.
As a result, banks tend to be especially strict about who they will lend to when a pre-owned vehicle is to be purchased. They are also prone to imposing additional conditions that can rule out otherwise-appealing purchases.
Lending That Makes a Definite Difference
Fortunately, there are options for car shoppers who find themselves facing down such hurdles. Heading to a local dealer who has made arrangements with a certain specialized type of lender can do away with a number of problems at once.
Most often, these dealers have signed agreements with financing companies that agree to purchase qualifying loan contracts from them. That will allow a dealer who sells pre-owned cars to extend financing to buyers on the spot, confident that the partner will take over thereafter. This has proved to be an efficient, convenient way for many people to secure financing that might otherwise be very difficult to come by.