As of June 1st, Prestige Financial Services is once again lending for people that have discharged bankruptcies and even for select applicants that have no bankruptcy at all. A few months ago, Prestige had to cease loan originations for all applicants that were not in an open bankruptcy due to the financial market. Now, luckily, they are considering a more diverse pool of applications and consumers will benefit greatly.

There is a catch, of course. For the open bankruptcy customers, Prestige is allowing up to 15% payment-to-income ratios. For non-bankruptcy customers, and those applicants with discharged bankruptcies, Prestige is only allowing a 10% payment-to-income ratio. There are still advantages to getting an auto loan before discharge, like being able to buy more car.

If someone making $3000 per month is approved with Prestige, the maximum car loan payment allowed would only be $300 for people not currently in a bankruptcy, but could be as high as $450 for someone in a chapter 7 or chapter 13 bankruptcy. The difference in payment represents a huge difference in vehicles that would work for the loan. Of course, Prestige looks at more than just PTI ratios when figuring our a maximum payment so the actual payments they approve could be less and they do turn some people down as well.

Does this signal a turn around in the lending industry? Let’s hope so. If a few more lenders start relaxing their guidelines, the auto industry will recover in the later part of 2009.

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