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The topsy-turvy new and used car markets show no signs of slowing down, as most analysts agree that high prices and low supply are here to stay, at least for a short while. Seemingly in response to the supply and demand changes, and in an attempt to get more butts in new car seats, Ford’s reportedly announced to dealers that it has removed the minimum credit score criterion on some 84-month-long loans.

Welcome to Headlight. This is a new Car Bibles daily news feature that lights up one current event in the car world and breaks it down by three simple subheadings: What Happened, Why It Matters, and What To Look For Next. We’ll be refining this over the coming weeks, but look for it in the morning (Eastern time) every workday.

What Happened?

As reported by Cars Direct’s senior pricing analyst Alex Bernstein, Ford announced to dealers that it has removed the minimum FICO score requirement on some 84-month loans. According to Bernstein’s conversation with Ford, this does not mean that credit is no longer relevant. Instead, it is viewed and put in the context of Ford’s proprietary criteria for determining eligibility. This change should allow more folks to qualify for financing on a new Ford vehicle.

Why It Matters

Right now, the entire world is in strange straits, as multiple economic problems have put global supply chains in a crunch and significantly reduced the number of available used and new cars alike. Particularly, lower-cost used cars are not the deals they once were, tempting many to consider buying new instead. For new cars, these 84-month long loans can reduce a buyer’s monthly payment burden by spreading the total cost over a longer period of time than a 48-, 60-, or 72-month loan. Removing the minimum FICO score could get more folks into Ford cars that might not have qualified.

It could also backfire in a mid-’00s-era Mitsubishi-esque credit scandal. It’s possible that riskier applicants could get saddled with high-staked debt and end up having paid well more than the car’s value at the end of a very long loan term, only for there to be little to no equity left in their used-up Ford vehicle.

This is all contingent on the loan term’s interest rate. A near-zero-percent interest rate on an 84-month long loan would result in negligible finance charges. However, an 84-month long loan at Ford’s 6.9% interest rate could add around $10,000 on the price of a higher-trimmed Bronco Sport, as Bernstein reported.

Ford credit’s financing criteria is pretty opaque, but I can’t imagine that those locked out of Ford financing because of their low credit scores would suddenly find themselves on the receiving end of a near-zero-percent interest rate on an 84-month loan. 

What To Look For Next

The change in the criteria for Ford’s 84-month loans has only been announced to dealers thus far, not the general public. In the near future, Ford dealers might start pushing financing specials and throw big marketing dollars in an attempt to sell more vehicles to people who don’t have the best credit score.

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