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Published On: Mon, Jan 28th, 2013

New Car Loans Being Offered to Wider Demographic

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Just a few short years ago, the chances were that unless you had an extremely high credit score, of 776 or more, you had just about zero chance of being accepted for a new car loan from any of the major banks or lenders. The good news coming from recent reports is showing that this average had dropped to just 760 in the first quarter of 2012, and is now aligned with industry figures from back in 2008 before the recession struck. Experian research figures show that in 2012 lending amounts and application success rates both increased dramatically, leading to an increase in new vehicle sales.

Auto Industry Stimulation

Experian automotive credit director Melinda Zabritski stated that “because the overall lending environment has improved, lenders are making loans available to a wider range of customers.” This is extremely encouraging to the auto industry as a whole, as this increased availability of funds has stimulated purchases of both new and used vehicles over the last 12 months. Previously to this, there was a very worrying stalemate situation where customers were simply unable to locate the funds required to purchase a new vehicle, and this was causing a backlog of unsold brand new vehicles.  The auto industry has suffered immensely as a result of the financial crisis, as the need to purchase a brand new vehicle was low down on the priority list of people who were suffering from the effects of the poor economy. Once individual job and finance worries were eased, the situation did not improve for auto companies as there was still no lending available for people who wished to invest in a new vehicle.

Thankfully for the auto industry, lenders are beginning to ease the strain and stimulate sales in this hard hit area of the economy.

What Changed?

According to the Experian research, bad credit car finance figures have improved in recent times due to a number of different factors including lenders with lower scores being approved, lenders making more loans, and lenders offering lower monthly payments. With lenders approving more applications with lower score ratings, the average approval rating number dropped. More actual loans were being handed out, stimulating sales in both new and used cars. This is what helped the auto industry to offer sales incentives due to larger numbers of total sales being predicted. Nearly all of these factors were controlled by the lenders themselves, proving many financial analysis companies right as they had been saying that the slow growth in the auto industry had resulted from a lack of lending and not a lack of interest in purchasing new vehicles.

2013 Lending Predictions

Interest rates for auto loans in 2012 dropped from 5.4% to 4.15% according to Bankrate.com, and this trend is set to continue into 2013. With lending patterns driving much of this change, and lending companies benefitting from the increase in revenue due to new customers, this should be good news for all. The automotive industry saw a rise in sales last year to a total of around 14.5 million, which was the highest figure since 2007, and this year analysts are predicting the figure to exceed 15 million. This is a positive sign for the industry, and will result in reduced prices and more first time buyer deals.

Experian are suggesting that 2013 will spell further improvements for those looking to take out a loan for a vehicle, and a wider demographic are now liable to be accepted for finance than ever before. Those with lower finance scores may well be accepted for finance whereas in the past few years they have been refused. The main way that this is being arranged is through a range of interest rates being offered depending on score. This means that if you apply for an auto loan and you have a credit rating of around 550 you might expect to pay an interest rate of 13% for a brand new car and 18% for a used vehicle. It is also possible to secure loan deals for a new vehicle even if you have a low credit rating, providing you can provide a down payment of 20% for brand new vehicles and 11% for used vehicles.

 

 

 

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  1. Johnf568 says:

    Thanks for the sensible critique. Me my neighbor were just preparing to do a little research about this. We got a grab a book from our area library but I think I learned more clear from this post. I am very glad to see such wonderful info being shared freely out there.

  2. Quicker Auto Loans says:

    […] New Car Loans Being Offered to Wider Demographic Just a few short years ago, the chances were that unless you had an extremely high credit score, of 776 or more, you had just about zero chance of being accepted for a new car loan from any of the major banks or lenders. The good news coming from … Read more on The Global Dispatch […]

  3. Ben S. says:

    Now what you need a 760 fico? Good Luck! Make sure you keep your credit in good shape. If you have any negative items fix them ASAP. best to use a good and reputable company. A few out there but use the ones with the best reputation like Lexington Law. They have been in business over 20 years. 

  4. When is a Car Loan Too Old to be Collected? | Finance says:

    […] New Car Loans Being Offered to Wider Demographic According to the Experian research, bad credit car finance figures have improved in recent times due to a number of different factors including lenders with lower scores being approved, lenders making more loans, and lenders offering lower monthly … Read more on The Global Dispatch […]

  5. Lastest Finance Loans News | Get Your Useful Informal In Link4Sure says:

    […] New Car Loans Being Offered to Wider Demographic According to the Experian research, bad credit car finance figures have improved in recent times due to a number of different factors including lenders with lower scores being approved, lenders making more loans, and lenders offering lower monthly … Read more on The Global Dispatch […]

  6. New Car Loans Being Offered to Wider Demographic – The Global Dispatch « Carolina Car Trader says:

    […] New Car Loans Being Offered to Wider DemographicThe Global DispatchJust a few short years ago, the chances were that unless you had an extremely high credit score, of 776 or more, you had just about zero chance of being accepted for a new car loan from any of the major banks or lenders. The good news coming from … […]

  7. New Car Loans Being Offered to Wider Demographic | says:

    […] […]

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