Ford removed the minimum credit score requirements for 84-month long loans because Direct Cars reports. For those who are not in the 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 reluctant to buy a vehicle they want, but the payments don’t work for them; long term loans have only become more popular in recent times. The pandemic in particular saw a raise loans over 70 months, thanks to customers facing higher prices on new and used cars and the car manufacturers themselves become more desperate for buyers like sales took a nosedive.
Ford saw it all and deployed zero percent APR for 84 months at the end of last year. To get that zero percent APR, however, you had to have good credit. This is no longer the case.
By removing the minimum score requirement, Ford has opened the floodgates for more buyers to find themselves in precarious financial situations. Americans’ debt situations are already out of control, and that does not help. But that’s not how Ford sees it. A representative for the company told Cars Direct he will make sure buyers can refund.
Our proprietary scoring models do a great job of gauging the likelihood that a candidate will be able to pay. FICO is an entry. Eliminating the separate FICO requirement opens up the funding prospect for more clients who would be eligible for 84 months funding in our models, regardless of their FICO score.
While they may have rating reviews, it doesn’t change that these long terms are open to more buyers than before. Also, it doesn’t take into account all the interest someone will pay over the course of the loan at that length.
For example, a buyer with a score in the mid-600s arrives on a Bronco Sport Badlands. With a few options, the MSRP is just under $ 40,000. If they get a rate of 6.9%, with $ 5,000 down for 84 months, that person will pay close to $ 9,000 in interest. If you are one of the shoppers who are shopping right now, don’t get lured or talk longer term due to lower payouts. If you can, stick to 60 months. You can have higher payments, but you will be better off financially in the long run.