Borrowers With Poor Scores Get Auto Loans
Borrowers With Poor Scores Get Auto Loans
For the first quarter of the year, Experian Automotive released a report about the status of automotive financing. This is good news especially for those who want to buy a new car.
According to the report, more buyers with lower scores are getting approved for auto loans. In financing a new car, the average credit score decreased six points to 760. In contrast, in financing a used car, average credit score decreased four points to 659.
Moreover, more loans are being offered by lenders. Loans to car buyers with nonprime to deep subprime credit score were up by 11.4 percent.
In addition, buyers are taking on loans of larger amounts. For a new car, average loan amount increased to $25,995, more or less $589 more than last year. However, for a used car, the average loan amount increased by $411 to $17,050.
Finally, lower monthly payments are being offered by lenders. According to Melinda Zabritski, director of automotive credit at Experian Automotive, monthly payments can be less expensive due to longer loan terms and lower interest rates. Average interest rate for new cars is 4.56 percent and 9.02 percent for used cars.
Experts said that all these good news were because there has been an increase in consumers paying back their loans. The reports adds that the number of loan payments that were overdue for 30 days declined by 7.6 percent and those that were overdue for 60 days declined by 12.1 percent. Also, there was a decline in vehicle repossession by 37.1 percent.
Zabritski added that lenders are able to offer more loans and charge lower interest rates because there are lower losses. However, more loans and lower interest rates will not guarantee borrowers approval for auto loans.
Whether you want a brand new car or a used one, experts advise taking into consideration the reliability of the car, the cost of financing and your ability to repay the loan.
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