Ford eliminated credit score requirements so that more customers can buy a new car for up to 84 months. However, it does not seem to be a good idea financially speaking, as the debt could be larger than the initial one.
Ford has eliminated the minimum credit score requirements for long-term loans of 84 months . For those who don’t know, this is not a good thing.
At first glance, these loans look good. The longer the term, the lower the payments . This has won over buyers who are undecided about a vehicle they want, but the payments are not working for them. Long-term loans have only become more popular in recent times.
The pandemic increased loans
The pandemic, in particular, saw lending spike over 70 months, as customers faced higher prices on new and used cars and automakers themselves became more desperate for buyers as sales fell. nosedive.
Ford took action on the matter
Ford saw all of this and released a 0% APR for 84 months late last year. However, to get that 0% APR, you had to have good credit, however that is no longer the case .
By removing the minimum score requirement, Ford has opened the floodgates for more buyers to find themselves in dire financial straits . The debt situation of Americans is already out of control and this is not helping. But that’s not how Ford sees it. A company representative said it will make sure buyers can pay.
“Our proprietary scoring models do an excellent job of assessing the likelihood that an applicant will be able to pay. FICO is an entry. The elimination of the separate FICO requirement opens the possibility of financing to more clients who would qualify for 84-month financing within our models, regardless of their FICO score, ”the representative noted.
Debt could be bigger than normal
While they may have score reviews, it doesn’t change that these long terms are open to more buyers than before. Also, this does not address all of the interest that someone will pay over the life of the loan at this length.
For example, a buyer with a score of around 600 walks into a Bronco Sport Badlands. With some options, the MSRP is just under $ 40,000. If they get a 6.9% rate, with a down payment of $ 5,000 for 84 months, that person will pay almost $ 9,000 in interest.
If you are one of the buyers currently looking to buy a new car, don’t be fooled or speak in longer terms due to lower payments. If you can, limit yourself to 60 months. You may have higher payments, but it will be better financially in the long run.