Auto loan terms continue to loosen for buyers with all kinds of credit
News from Washington Post:
DETROIT ? For car buyers seeking auto loans, happy days are here again.
U.S. banks and auto finance companies are once again welcoming all kinds of customers, even those with less-than-stellar credit. The average credit scores of new and used car buyers, which spiked during the economic downturn, have fallen to nearly the same level as 2008.
Better yet, experts don?t think the credit pipeline will dry up anytime soon. Low interest rates are making it cheaper for banks to get money, which makes them more willing to lend. The federal funds rate ? or the rate at which banks lend money to each other ? is now near zero percent, down from 2 percent in the summer of 2008.
Loans to subprime buyers ? or buyers with credit scores of 679 or lower ? are particularly attractive, since banks can charge higher interest rates. The average interest rate for a deep subprime loan ? or a loan to someone with a credit score below 550 ? on a new car is 12.9 percent, compared with 3.2 percent for buyers with the highest scores, according to Experian Automotive, which tracks automotive credit data.
At the same time, both banks and consumers have lowered their debts, meaning even subprime loans are less risky because they?re less likely to be in debt and unable to pay. For example, just 0.57 percent of auto loans were 60 days delinquent in the first quar????? continues on Washington Post
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Auto Loan Terms Continuing to Loosen for Buyers
News from The Ledger:
Published: Wednesday, July 18, 2012 at 10:15 p.m.
Last Modified: Wednesday, July 18, 2012 at 10:15 p.m.
DETROIT | For car buyers seeking auto loans, happy days are here again.
U.S. banks and auto finance companies are once again welcoming all kinds of customers, even those with less-than-stellar credit. The average credit scores of new and used car buyers, which spiked during the economic downturn, have fallen to nearly the same level as 2008.
Better yet, experts don?t think the credit pipeline will dry up anytime soon. Low interest rates are making it cheaper for banks to get money, which makes them more willing to lend. The federal funds rate ? or the rate at which banks lend money to each other ? is now near zero percent, down from 2 percent in the summer of 2008.
Loans to subprime buyers ? or buyers with credit scores of 679 or lower ? are particularly attractive, since banks can charge higher interest rates. The average interest rate for a deep subprime loan ? or a loan to someone with a credit score below 550 ? on a new car is 12.9 percent, compared with 3.2 percent for buyers with the highest scores, according to Experian Automotive, which tracks automotive credit data.
At the same time, both banks and consumers have lowered their debts, meaning even subprime loans are less risky because they?re l????? continues on The Ledger
? Read the full article
.
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