. Easier car loans benefit subprime borrowers at a time when more Americans than ever have low credit scores. A looser car credit market helps the auto industry sell more cars. Auto lenders are happy with more cars being sold. Also, more cars being sold mean a recovering economy.
More car loans accessible
Auto lenders are expanding as the car credit market shows signs of life. The Associated Press reports that car buyers with low credit scores are getting a break. 60 percent of people under a 620 credit score could get auto loan application in the past. 5 percent was the going rate for the last year. Now it is at a whopping 9 percent. Subprime borrowers nevertheless need to make a bigger down payment and will pay more interest, but car buyers with poor credit make up a big chunk of the market.
Car loan interest rates falling
The Associated Press reports that those with great credit in the first quarter of 2010 made up 17 percent of auto loan applications. Rather than getting new cars with loans, 53 percent got used cars. Borrowing could increase since car loan interest rates are diving down. 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.
Low credit score buyers needed by auto makers
Credit scores fell for all Americans within the country. Figures provided by FICO Inc. show that 25.5 percent of consumers — about 43 million individuals — now have a credit score of 599 or below. Subprime lending comes with higher default rates, which hurt the auto lending industry during the economic meltdown. The But the Wall Street Journal reports that GM wants risky buyers now. Most consumers are those that have lower credit scores with is why GM wants them now.
Subprime auto lending doing great
AmeriCredit Corp made a deal with GM to help individuals get loans with bad credit. GM gives more competitive rates because they are reducing the cost of borrowing to encourage people to purchase from them. For subprime auto lending, Americredit Corp. is one of the biggest companies. A year ago, the company 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
