It’s getting easier to get a car loan, which is good news all around. Car loans will help many who have low credit scores and no way out. The credit market getting easier will make cars sell faster. Auto lenders are happy with more cars being sold. And selling more cars is good for a U.S. economic recovery that is trying to gain momentum.
More car loans accessible
Signs of life let auto lenders expand their products. The Associated Press explains that loans are now accessible to those who want cars but don’t have the credit for it. Historically, the approval rate for subprime borrowers — those with scores below 620 — ran about 60 percent. Last year, the rate fell to 5 percent. Now, it is running at 9 percent. A huge part of the market consists of those with a bad credit score although they need to pay bigger down payments and will end up with more interest payments.
Interest rates for car loans diving
The Associated Press reports that those with great credit in the first quarter of 2010 made up 17 percent of autoloans. Rather than getting new cars with loans, 53 percent got used cars. Because interest rates are dropping, this rate might increase. The average interest rate for a four-year car loan this month is 6.3 percent, down from 7.2 percent a year ago, according to Bankrate.com.
Low credit score buyers needed by auto makers
Credit scores are falling to new lows for millions of Americans. Below 599 in credit is now, as outlined by FICO Inc., 25.5 percent, 43 million of people. Subprime lending comes with higher default rates, which hurt the auto lending industry during the economic meltdown. But the Wall Street Journal reports that General Motors in unique is looking for methods to expand loans to riskier buyers. Those with bad credit have to buy cars since they, historically, have made up most of the cars being bought from GM.
Subprime auto lending doing great
AmeriCredit Corp made a deal with GM to help individuals get loans with bad credit. Under this arrangement GM augments the loans with cash incentives so it can offer more competitive rates. Americredit Corp. is a huge subprime auto lender. A year ago, the business worked with 4,500 dealers when now it has increased so it can start working with 8,000 dealers.
Associated Press
google.com/hostednews/ap/article/ALeqM5gCH7uRdNTEXaUCoNUPeukZZi3qDwD9H22DQ00
Bankrate.com
bankrate.com/
Wall Street Journal
