Want a Hybrid Vehicle? Good Luck with Financing!

Banks and other lending institutions aren't denying the environmental benefits of a hybrid vehicle. However, sometimes they're denying the financing for them, particularly to people with poor credit. Car loans, like home mortgages, are getting tougher for people to find.

What's the latest victim of the global economic crunch? Auto loans. Car dealers who thought that they might have escaped the aftermath of the crumbling banking industry are instead finding that they're caught in the middle of the meltdown. Car loans are difficult to finance these days, especially for people with bad credit. That's hard to take for most Americans, particularly those who wanted to buy a hybrid vehicle to cut emissions and save on gas.

Spending to save at the pump

Hybrid vehicles have become all the rage, and it's not because of their looks or handling. Prices at the pump have redefined what's desirable in an automobile: SUVs are out, and low-emission hybrid vehicles are in.

The switch to fuel-efficient vehicles can be attributed to two kinds of green movements. The first is concern over the environment. More people now understand the correlation between auto emissions and greenhouse gases, and they're taking action to reduce their carbon footprint.

The second concern is a lack of green in the wallet, particularly after a visit to the gas station. The rising costs of fuel are redefining our tastes in automobiles in terms of economics. The exceptional gas mileage of a typical hybrid far outperforms the mileage delivered by a conventional automobile.

Lagging auto loans

The auto industry has felt the pinch of a poor economy for the last few years, but the credit crunch has caused some significant pain as of late. More auto dealers are reporting problems financing potential buyers who have poor credit. It's hard to complain about the financial fact that people who have bad credit aren't getting loans; it was their ability to get mortgage loans that caused this credit mess in the first place.

Unfortunately, it's now becoming difficult even for people with good credit to get qualified. Difficult, but not impossible. The financing process is just more time intensive, and more thorough. In reality, this is the way banking should be. Credit worthiness is a privilege, not a right, and people should only be qualified for what they can afford. Taking the time to carefully scrutinize loan applicants may not be the best news for car dealers, but it's a sign that a degree of fiscal sanity has returned to the lending industry.

The auto industry, much like its housing counterpart, has enjoyed a spectacular ride during recent years, thanks to easy access to credit. That easy money has resulted in some serious pain for everyone from Wall Street to Main Street, and redefined the lending landscape. Car loans won't be made available to you unless you have your financial house in order. In other words, your credit needs to look great if you want to do some good for the environment.

Source: Mortgage Loan