Easier loan access is a positive sign for the industry.
New vehicle loans to “credit-challenged” buyers grew by 12.7% in Q3 2010, compared with Q3 2009, as lenders loosened their auto credit standards slightly as delinquencies dropped.
The share of new auto loans to non-prime people with a 620 to 679 credit score rose from 9.79% in Q3 2009 to 10.86% in Q3 2010. For sub-prime customers (credit scores from 550 to 619), their share of auto loans increased from 5.66% to 6.61%, while the share of auto loans to deep-sub-prime customers (credit scores below 550) rose from 1.46% to 1.59%.
The auto loan news is moderately good for the auto industry and suppliers as consumer confidence is weak, unemployment remains stubbornly high at 10%, and the Seasonally Adjusted Selling Rate remains stuck at 10 million units annually on a retail basis.
“Easier access to loans is a positive sign for the auto industry, as tighter loan criteria during the economic downturn represented a significant challenge for automotive manufacturers and their retail networks,” said Scott Waldron, president of Experian Automotive, the source of the data.
People are also are doing a better job of repaying auto loans, as 30-day and 60-day delinquencies both dropped in Q3 2010, compared with Q3 2009. The 30-day delinquency fell 8.43% (3.27% to 2.99% delinquencies). The 60-day delinquency rate fell 17.39% (0.93% to 0.77% delinquencies).
Findings from the Q3 report also showed that the total dollar volume of auto loans at risk of default dropped by $6.4 billion. The average loan amount for a new vehicle jumped to $25,273 in Q3 2010 from $22,743 in Q3 2009. The average loan amount for a used vehicle jumped to $16,706 in Q3 2010 from $15,729 in Q3 2009
