. Car loans will help many who have low credit scores and no way out. The credit market getting easier will make cars sell faster. Selling more cars to people with low credit scores is good for subprime auto lenders. Also, more cars being sold mean a recovering economy.
Bad credit, still get car loans
Signs of life let auto lenders expand their products. The Associated Press reports that car buyers with low credit scores are getting a break. Typically, those with scores below 620 only get approved 60 percent of the time. The rate was down to five percent last year. Now it is at a whopping 9 percent. Car buyers with bad credit have to pay more interest and have bigger down payments but being able to get a car at all makes them a bigger part of the market.
Interest rates for car loans falling
About 17 percent of all the auto car loans written for new car buyers in the first quarter of 2010 were to customers with subprime credit, the Associated Press article said. Subprime borrowers took out 53 percent of the loans for used cars, according to the credit reporting agency Experian. 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, as outlined by Bankrate.com.
Auto makers need any kind of buyer
Americans have seen their credit fall drastically. Figures provided by FICO Inc. show that 25.5 percent of consumers — about 43 million people — now have a credit score of 599 or below. Higher default rates came with subprime lending which hurt the economy bad. Buyers that are risky are wanted by GM now the But the Wall Street Journal reports. Those with bad credit need to purchase cars since they, historically, have made up the majority of the cars being bought from GM.
Great business with subprime auto lending
To make more loans to people with low credit scores, GM made a deal with subprime auto lender AmeriCredit Corp. GM gives more competitive rates because they’re reducing the cost of borrowing to encourage people to purchase from them. 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
