Auto loan customers can expect closer scrutiny

Amanda Reavy

Despite reports of financing problems in larger markets across the country, local car buyers with good credit should have no problem getting auto loans, automobile dealers and banks say.

“If you’ve got poor credit, that’s been scrutinized more, but not good credit,” said Mick Patkes, a sales team member at Tjelmeland Laketown Automotive. “There’s a lot of low-prime institutions that deal with people with marginal credit. A lot of that has dried up, and that’s getting tougher just like it has in the housing market. That’s tougher in any market.

But as far as the car market and good credit, it’s not a problem, it really isn’t.”

With the credit crunch in full force and a Wall Street bailout package yet to take effect, national media reports say money is scarce for auto dealers, auto-finance companies and other lenders who finance auto loans, and when it is available, it’s at a high rate, even for prime borrowers.

Not so in Springfield, where local banks and credit unions say plenty of money is available for lending.

“I don’t think any of your local banks are having any trouble making a car loan if you qualify. I think everybody’s more than willing to do it,” said Tom Marantz, chairman and chief executive officer of Bank of Springfield. “Community banks are in good shape, and I think we’ll keep lending money like we always have. Even, say, if you were a subprime borrower with bad credit, you can rehabilitate that and get loans, but it’s not, at the national level, as loose as it’s been.”

Other local banks say they, too, have not tightened their credit and don’t plan to in the immediate future.

Lori Ernst, vice president of lending at Heartland Credit Union, said credit unions typically have always required good credit scores, so their standards have not changed.

“We never changed our standards during the (lending) heyday, and we haven’t changed our standards now. If you have good credit and you’ve maintained good credit, then we can help you out,” she said. “Part of the reason why we do have money to lend is we didn’t get into a lot of risky lending. We have the high credit standards we’ve always had.”

Many of the troubles national lenders are experiencing has led to business being sent instead to local banks and credit unions, Ernst said. In fact, September was Heartland’s best month for auto lending through its indirect program, in which the credit union finances automobiles through dealerships.

Micah Bartlett, president of Town and Country Financial Corp., parent company of Town & Country Bank of Springfield, said his institution also has not cut back on auto loans.

“I suspect that they’re finding that more of the pullback has come from a captive finance market, which are the large automakers with their own finance arms and the big national players who are having to make those decisions across the nation,” he said.

As a local enterprise, Bartlett noted that Town and Country can make lending decisions specific to its market and customers.

“The credit markets certainly will affect Springfield as they affect the rest of the world, so depending on market events, banks will continue to have to re-evaluate their lending practices. In the short run, here, dealing with your local bank is still the best option,” he said.

Local auto dealers as well say they have not turned away anyone with good credit.

Blair Molumby, general sales manager for Royal Oaks Nissan, said he’s kept up with national reports and has been “kind of waiting for the ball to drop.”

But that’s yet to occur, he said.

“There hasn’t been a huge spike in rates or anything. And it all depends on the specific customer, due to their past credit history, how much money they put down,” he said. “We’ve had no trouble financing loans. Not one bit.”

A recent car shopper, Trevor Planck of Taylorville, said news reports about the credit crisis nationally had caused some concern before he went to Tjelmeland Laketown Automotive last month to buy a Nissan Altima.

“I needed a more economic means for transportation,” he said. “I found that getting financing was easy. It was no problem at all.”

He said he didn’t feel his credit history was scrutinized any more closely than it would have been in the past.

Joel Tjelmeland, owner of the dealership, said auto loans in the secondary markets are tough, but it’s always been that way.

“It’s gotten to be a little bit tighter than it used to be. It still is not impossible, they’ve just changed some of the lending parameters,” he said, noting that lenders are now using the Black Book, a wholesale guide, to evaluate the amount of financing as opposed to figures from the National Automobile Dealers Association.

Tjelmeland’s advice to buyers is to shop around for loans.

“If they find the car they like, they may have to do a little bit of legwork on their own, maybe even going into a lender directly,” he said.

At S&K Pontiac GMC, general sales manager Chris Tate said he’s noticed a slight difference, with some banks wanting to be “a little safer” with loans, such as asking for a larger down payment. But he stressed that loans for customers are readily available.

“We are pretty lucky here in the Springfield area because we’re not as affected as the urban areas are. Our economy with the state workers here is fairly stable,” he said.

Tate also said that his management team has established a good business relationship with the banks.

“There’s a certain percentage of customers that have less-than-desirable credit, and that’s always been. I think over the years that’s been climbing with more people with credit problems,” he said.

“We’re just maybe having to work a little harder to convince a bank that a guy is good and this guy deserves a loan.”

Amanda Reavy can be reached at (217) 788-1525