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Common Loan Eligibility Requirements for Auto Loans

last updated November 16, 2013 by

While auto lenders are known for their flexibility, not every automobile qualifies for an auto loan.  Lenders have to be protective of their investments, so they carefully screen every applicant not only for their credit history but also for the quality of their proposed auto purchase.  Your car lender can be a valuable aid as you look for financeable vehicles, make sure to contact Complete Auto Loans for the most up to date loan eligibility requirements.

Vehicle Age and Condition

When a lending agency creates an auto loan, they are required to consider the worst possible scenario when they make the terms of the loan.  IF a buyer defaults on their loan, and the bank repossesses the car, the lender will be in the position of trying to sell the car to recoup as much money as possible.  For this reason, lenders are a lot friendlier towards new cars and lightly used cars than they are to high mileage cars that might be more difficult to sell.  Lenders almost always charge a higher interest rate for used cars, if they agree to accept the car at all.

Customized or Modified Cars

Most lenders will turn down loan requests for cars that have been modified from their manufacturer specifications.  Modifications make it difficult for the bank to assign value to a vehicle, as many buyers won’t pay a premium for modifications at all.  Modifications might also be unsafe, and they can detract from a vehicle’s overall value by voiding the manufacturer’s warranty.

Complete Auto Loans understands that many vehicles may have been slightly modified as a result of repairs or upgrades, and most lenders will make a decision on a case by case basis.  In general, non “performance” upgrades are acceptable to lenders, as are some minor cosmetic changes.

Non-Standard Vehicles

Lenders will almost never finance the purchase of a car with anything but a clean and clear standard title.  Rebuilt cars salvage cars, or lemon law vehicles are extremely difficult to sell, and they are almost impossible to finance.  If you are thinking about buying a grey market vehicle, be prepared to pay in cash.  Besides, it is usually cheaper in the long run to buy a frugal but functional car, as it will retain its value better and will prove to be more reliable.