Experian Automotive said the US automotive loan market showed continued improvement in the last quarter of 2011 with interest rates for new and used vehicle loans reaching the lowest levels since 2008.
According to its quarterly automotive credit analysis, average credit scores for new and used vehicle loans also dropped, the%age of loans to customers with nonprime, subprime or deep subprime credit scores increased, and lenders increased their willingness to make loans between six and seven years long.
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“The improved automotive lending market is good news for consumers in the market to buy a vehicle,” said Melinda Zabritski, director of automotive lending at Experian Automotive. “The confluence of low interest rates, longer loan terms and an increase in loans outside of prime provide a great opportunity for more people to find a vehicle that suits their needs.”
Consumers also continued to do a better job of repaying loans in Q4 2011, as loan delinquencies fell. The 30-day delinquency rate fell 6.57% from Q4 2010 to Q4 2011 (2.98% to 2.79%). The 60-day delinquency rate fell 9.51% from 0.79% in Q4 2010 to 0.72% in Q4 2011.
Another positive sign for the lending market is that the overall dollar volume of loans at risk dropped to US$18.5bn, a $1.862bn drop from Q4 2010. Meanwhile, the total volume of open loans rose by $23.9bn in Q4 2011 to $658bn.
“Lenders are clearly on much more solid ground than they were two or three years ago,” said Zabritski. “With delinquencies and total dollar volume at risk down, lenders have been able to adopt more aggressive strategies. This tends to benefit everyone, from lenders to automotive retailers to the end consumer. With more lenders aggressively competing for business, it’s a great time for consumers to buy or finance a vehicle.”
