Car lending statistics are showing that car loans are opening up for poor credit borrowers. At each tier of credit rating, it is becoming easier to get car loans. Additional possibilities for bad-credit borrowers are also expanding.
Dropping numbers of installment loans for bad credit
During 2008, the amount of lending of installment loan to customers with bad credit dropped off a cliff. Usually, the approval rate for instant money for autos hovered between 60 and 90 percent, depending on credit rating. In 2009, personal loans given to borrowers with bad credit for auto purchases dropped to 5 percent. Borrowers with very good credit ratings had about a 70 percent chance of being approved for an automobile loans.
Auto lending’s effect on the economy
There is a good reason the financial industry watches auto lending. About 4 percent of the U.S. economy is made up of the auto industry. 250,000 auto-industry jobs are chopped since the economic downturn began. When automobiles are not sold, jobs are cut.
Developing lending options
There are a couple of more possibilities for borrowers who want to purchase a car with fast cash. Dealerships and lenders are asking borrowers to turn in with higher down payments.Incentives such as zero interest are also propping up auto sales. Regional and local banks, as well as specialty financiers are all increasing the number of loans offered to all levels of borrowers. Subprime borrowers, though, are nevertheless facing a tough lending market. Just two to three years ago, there was a 60 percent chance of a “subprime” borrower getting an autoloans. Approval rates for most subprime borrowers, though, are at only about nine percent – which means that there is less than a one-in-ten chance that those with bad credit will really be approved for an auto loan.
