Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: May 2, 2012

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Lenders in the car loan business are now issuing vehicle financing to borrowers with less-than-perfect credit scores. In fact, they’re lending to borrowers with even less-than-average credit ratings, prompting some experts to say that the auto financing industry has finally reached pre-recession levels again.

Before the economic collapse of 2008, lenders were very relaxed with their standards.

“They were pretty much lending to anyone with a pulse,” said Jesse Toprak, an industry analyst with, to CNN Money.

But after the country’s economic meltdown, and after defaults began rising to unprecedented levels, lenders in all industries began to tighten their standards up. Their requirements for qualifying, however, went beyond what many could meet, and the issuance of financing came to a screeching halt.

This period of lending stagnation and unrealistic prerequisites for qualifying for a car loan didn’t last however. Today, we’re seeing consumers with average and less-than-average credit scores being given financing opportunities.

According to a survey by the Federal Reserve, banks eased up on their standards for car loans, as well as other loans in different industries.

“I don’t think you need to have the 800-plus FICO score that was probably necessary in 2009, said Alex Gutierrez, an industry analyst with Kelley Blue Book, according to CNN.

Having a maintaining an 800-plus credit score is extremely difficult to do, and lenders found that while lending exclusively to this low-risk population reduced their risk of default, it also cut into their profits because they were excluding a large amount of credible, willing, and able borrowers from financing a car loan.

“Having looked at over 5,000 loan applications, credit score is not the best indicator of people’s ability to repay,” Toprak explained to CNN.

Such a statement is particularly true now as millions and millions of Americans recently walked away from their mortgages, thus inviting a massive blow to their credit scores.

That’s not to say higher credit scores don’t help though.

While lenders are relaxing their standards, the very best interest rates are still reserved for those with higher credit ratings.