What are the top 5 things you look at when reviewing a consumers car loan application?
1. Payment-to-income ratio. Are they buying a car they can afford? The car payment should be no more than 15% of their gross income, preferably 10%. So if someone brings home $3,000 a month, they should have a $300 to $350 monthly payment. 2. Income level. The minimum level we look at is $2,000 to $2,500 a month. We look at the applicant’s other obligations as well. 3. Time in the credit bureau. We look for them to have 5 or more years of credit history. Having 5 to 7 trade lines is good. Previous auto credit is a plus. 4. Are they trading in a unit (car)? If not, are they taking on another payment? 5. Are they putting any cash down? With all the aggressive rebates right now, we don’t give as much weight to the down payment. The manufacturer rebates are bringing the car back down to its real value. The more cash down, the more commitment the borrower has to repay the loan. Q: What is the default rate on the auto loans you fund? A: About 2.5 to 3% of our auto loans are 60+ days delinque
