No more free rides: Car lenders tightening up

It's not just home loans that are hard to come by these days. Lenders are getting tighter with car loans as well, and new buyers should be prepared to make higher down payments.

The average down payment in September was $3,108, which is the highest figure since car-buying research site Edmunds.com started tracking these stats in 2002. This isn't just a gradual shift, though -- the average loan in August accounted for 88% of the car's value, down sharply from 95% in July.

If you want a new car, you're going to have to be able to prove you can afford it. That doesn't just mean coming up with more cash up front. You're going to find it difficult to secure a loan without a good credit score -- 700 or higher is what lenders are looking for these days. It will help you out in price negotiations if you already have a loan approval before you start shopping. Knowing your limitations up front is a good way to keep from getting in over your head.

Don't expect to finance too many extras, either. If you can't pay for them up front, lenders are unlikely to extend credit for any accessories and options beyond the basic purchase price. Lenders are also less likely now to finance remaining debt on a trade-in vehicle.

Banks are tightening up because they have to; too many defaults have cost them dearly for their loose lending habits of the recent past. These new restrictions may be a drag for buyers, but it's good for them, too. It will help keep people from getting into debt they can't get out of, and might even encourage people to take better care of their automobiles so that they can actually get $20,000+ worth of value out of the investment. It's about time consumers got more thoughtful about their five-figure transactions.