Credit score

Ford removes minimum credit score for 84-month loans

Ford has waived its minimum FICO requirement for 84-month financing, according to a bulletin sent to dealerships this week. While 84-month loans aren’t for everyone, the change could allow consumers to no longer feel restricted by their credit score in the same way as before when buying a new car or of a Ford truck.

7-year loans are still not common, but the incentives at the start of the pandemic saw a sudden increase in these types of transactions. In the case of Ford, the company introduced 0% APR for 84 months. Even though the offer disappeared within months, 7-year loans continued to be part of Ford’s incentive programs.

Does removing its minimum FICO requirement allow anyone to be financed, including buyers who may not be qualified to take out an 84-month loan on a new car? The answer is no, at least based on a statement CarsDirect received from Ford Credit spokeswoman Margaret Mellott via email this morning.

“Our proprietary scoring models do an excellent job of assessing the likelihood that an applicant will be able to pay. FICO is an entry. Eliminating the separate FICO requirement opens the prospect of funding to more customers who would qualify for 84 months financing within our models regardless of their FICO score.”

Although a buyer’s credit rating plays an important role in financing, it is only a basic requirement for an auto loan. In this case, Ford’s captive finance company chose to adjust its requirements. This could make being able to afford a new car feel less like a black or white question related to one’s credit rating.

84 month loans often have higher rates which can result in significant interest charges. While the benefit is usually a lower monthly payment, the total cost is another matter. For example, we estimate that Ford’s current rate of 6.9% on the 2022 Bronco Sport would make a $40,000 SUV cost over $50,000 before taxes and fees.

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