NEW YORK (MainStreet) Consumers with less-than-perfect credit will find it easier to get a car loan this year, as the auto industry continues to relax lending standards and use more than a credit score to qualify buyers. From January through October of 2013, new auto loans totaled more than $405 billion, the highest in eight years.
Nearly a third (31%) of those loans were issued to "subprime" borrowers consumers with FICO credit scores of 660 or below.
"Auto delinquencies have declined to levels last seen in mid-2006, and the strength in the performance of loans booked in the last few years is helping to make credit more widely available to those with higher-risk credit profiles, namely subprime borrowers," says Amy Crews Cutts, chief economist for Equifax, a credit data provider. "The choices consumers are making with the types of cars they are buying have changed in the aftermath of the Great Recession, with a heavy emphasis on value for the dollar."
Year-over-year, the total balance of new loans for the first ten months of 2013 increased 14.7%, while the total number of new loans increased 11.6%, according to Equifax.
Other highlights from the most recent data include:
- Balances on outstanding auto loans ($859.6 billion), and the total number of existing loans (62.3 million) in December 2013 are the highest in more than five years
- The total outstanding balance for loans funded by auto finance companies is $442.5 billion, while loans funded by banks, savings and loans and credit unions are at $417.2 billion, a five-year high for both lending segments
- Serious delinquencies on auto loans funded by finance companies in December 2013 represent 1.88% of outstanding balances, a year-over-year decrease of 13.5%
- In that same time, serious delinquencies on auto loans funded by banks or other depositories are 0.41% of outstanding balances, identical to December 2012