Auto Loan Rates Falling and Lending is on the Rise, Shows Report
Experian Automotive has released its quarterly report showing that the average credit score for financing a new vehicle dropped to near pre-recession levels six points to 760 and dropped four points to 659 for used vehicles. Lower interest rates and increased loan terms are now allowing more consumers more purchasing opportunities.
"During the first quarter of 2012, car shoppers definitely found more favorable conditions for their vehicle loans," said Melinda Zabritski, director of automotive credit for Experian. "A reduction in average credit scores, lower interest rates and a lengthening of loan terms are all very good signs for the market and offer great opportunities for consumers looking to make a deal on a new or used vehicle."
The report also shows an overall increase in the amount of money financed, with the average amount financed on new vehicles up by $589, reaching a total of $25,995. For used vehicles, the average amount financed increased by $411, bringing the average total to $17,050.
"Our report shows automotive lending is as healthy as it's been since the market bottomed out in 2008," continued Zabritski. "With consumers doing a good job of paying back loans on time and the percentage of dollars at risk reaching its lowest point in six years, lenders are able to extend terms and provide lower rates. This thawing of the credit pipeline has been good for everyone, from consumers to lenders to automotive retailers."
The report also showed auto repossession rates are down 37.1 percent, thirty-day delinquencies dropped 7.6 percent, sixty-day delinquencies dropped 12.1 percent, loans to nonprime, subprime and deep-subprime consumers increased by 11.4 percent, and the market shares of banks grew by 7.5 percent to 40.21 percent market share, while credit unions grew by 10.5 percent to 16.89 percent market share.