For some drivers, owning a car presents a host of maintenance problems and costs of depreciation. This has led to a passenger car leasing industry. The consumer can rely on the dealer to perform routine upkeep such as oil changes, and after the term of the lease ownership reverts to the dealer. Such arrangements account for a sizable share of new vehicles that enter the market in the United States.
Both financing and leasing are multi-year investments for the banks, credit unions, and dealerships that pay the up-front costs of the vehicle. As such, the borrower’s credit score influences the value of the loan, as well as the interest rate paid. Even for a used car, the average credit score needed matters and increases with a better economy. The loan market is changing with technology, as a growing minority of consumers are applying for automotive loans online. This disruption is one of many ways that financial technology, or fintech, is changing traditional banking relationships.