Lexus Financial Services auto loans review: Ability to apply for preapproval before heading to the dealership

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In a Nutshell

Lexus Financial Services offers loans to buy a new or pre-owned Lexus as well as leasing. The finance company also offers the ability to apply for preapproval online, but you’ll be limited to shopping at a Lexus dealership.

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Pros Cons
Ability to apply for preapproval Limited loan options
Allows co-applicants Only available for Lexus leases or purchases from an authorized Lexus dealership
Special financing programs for college graduates and military members May be harder to qualify if you don’t have good to excellent credit

What you need to know about Lexus Financial Services auto loans

Lexus Financial Services (LFS) is a division of Toyota Motor Credit Corporation. It offers auto financing and leasing through participating Lexus dealers across America, Toyota Motor Credit Corporation and Toyota Lease Trust. If you’re considering applying for a Lexus Financial Services auto loan, here are some things to know.

Limited loan options and dealership limitations

If you want LFS financing, you’ll be limited to purchasing a new or used vehicle from an authorized Lexus dealership or leasing a Lexus. Financing options include …

  • A new-car loan for a new Lexus
  • A used-car loan for a pre-owned, L/Certified by Lexus vehicle
  • Lease buyout loan for your LFS-financed Lexus
  • A lease contract for a new or qualified L/Certified by Lexus vehicle

Solid credit likely required

You may need good to excellent credit to qualify for a loan through Lexus Financial Services. The weighted average FICO scores of those who got loans through Toyota Motor Corporation in 2018 was 735, according to the February 2019 Toyota Financial Services investor presentation.

Special financing programs

Lexus Financial Services offers several special financing programs for qualifying customers, including those for upcoming and recent graduates, military members and repeat customers.

Graduates: If you graduated within the past two years (or expect to graduate in the next six months) from a qualified college, trade school or other approved program, you may be eligible for a $1,000 reward, along with a competitive annual percentage rate and terms. To qualify, you’ll have to buy or lease your new Lexus by Jan. 6, 2020.

Military members: Active duty, retired and recent veterans as well as their families may be eligible for a $1,000 reward that can be used toward a qualified financed or leased Lexus at participating dealerships (through Jan. 6, 2020).

Repeat customers: Lexus Financial Services offers exclusive benefits to people who repeatedly finance or lease new or qualified L/Certified vehicles, along with meeting other eligibility requirements. For example, if you qualify LFS will waive the disposition fee at the end of your current Lexus lease term if you choose to lease another Lexus.

A closer look at Lexus Financial Services auto loans

When trying to decide if an LFS auto loan is right for you, here are a few more things to consider.

  • Lexus Financial Services offers loan terms ranging from 24 months to 72 months. But remember that with a longer loan term, you’ll probably pay more interest on the loan.
  • LFS allows co-applicants. A co-applicant with good credit may help improve your odds of being approved for financing.
  • If you’re having trouble making payments, you might be able to defer a monthly payment to the end of your contract. Keep in mind that a loan extension or deferral could come with fees or additional finance charges.
  • Depending on your state, you may be charged a fee if you make a late payment.
  • LFS offers a variety of optional vehicle protection plans, including service agreements, maintenance plans and tire and wheel protection plans. Though these likely cost extra.

Is a Lexus Financial Services auto loan right for you?

Financing through Lexus Financial Services may be a good option if you plan to buy or a lease a Lexus from a local Lexus dealership, especially if you qualify for a special offer or financing program.

But if you don’t have good credit or want to buy an older, used Lexus, a loan through LFS may not be your best bet.

How to apply for a loan from Lexus Financial Services

You can apply for preapproval for a car loan or lease online. To apply, you’ll need to be at least 18 years old. Just remember that preapproval isn’t a guarantee of loan or lease approval.

1. Click on “Apply for Credit” at lexusfinancial.com.

2. Enter your ZIP code.

3. Choose the model you want to buy or lease.

4. Indicate whether you want to buy or lease.

5. Enter your name and email address, along with your housing information, Social Security number and education and income details.

6. Provide information for a co-applicant, if applicable.

7. Click “Next” and select a local Lexus dealer.

8. Choose your desired loan term, down payment and your vehicle trade-in value, if applicable.

9. Carefully review the company’s privacy options and terms and conditions. If you agree, submit the application.

In its online terms, LFS notes that it will make inquiries into your credit history, but doesn’t specify whether it completes a soft or hard inquiry. It’s likely a hard inquiry though, which could negatively impact your credit.

If you’re preapproved, you should receive a preapproval certificate via email that you can take to your selected Lexus dealer. At the dealership, you’ll choose a vehicle and complete the financing process.

Auto loan alternatives to consider

If you prefer to shop around at other dealerships or aren’t sure whether financing from Lexus Financial Services is right for you, here are some other possible options.

  • PNC auto loan: A PNC auto loan could be a good option if you want to shop like a cash buyer at your choice of dealership.
  • CarsDirect: A loan through the CarsDirect lender network might be ideal for someone with no credit or lower credit scores.