A recent report done by Experian Automotive’s State of the Automotive Finance Market showed that a majority of used vehicle buyers are in fact, sub prime borrowers. The report indicates that the total subprime financing market for used vehicles increased to 54 percent, up from 51 percent last year. The average credit score for used car buyers was 668. In addition, the report states that delinquencies and repossession rates both declined.
According to Melinda Zabritski, director of automotive credit at Experian Automotive, all of these trends are positive for subprime borrowers as well as the dealers who service the subprime market. Zabritski states, “With lenders increasing their appetite for risk, consumers are in a good position to obtain financing. Expanding loans to lower-risk tiers opens the market for more car shoppers. Both of these trends are positive signs of a strong and recovering auto finance market, which ultimately benefits the consumer and the entire auto industry.”
With the majority of the used car market being made up of subprime borrowers, lending institutions and dealers alike have realized this segment of auto buyers needs attention. As a result of the economic downturn, banks tightened up on their purse strings and the ability to obtain an auto loan became extremely difficult. Lenders were leery about lending in general and took a “wait and see” attitude. Basically, lenders stopped lending, except in those cases where a person had a long and excellent credit history. Thankfully, for those currently in the market to purchase a vehicle, as indicated by the recent report from Experian, times are changing!
Good For Business
Banks and auto financing companies have widened their scope of business as they search for new borrowers. They have realized that people with bad credit, while riskier to finance, can in fact be good customers. Banks have also begun to recognize that subprime auto loans were not the reason that the market ran into past trouble; it was lending to them without so much as verifying their employment, income, and assets that was the problem. With a little more diligence and attentiveness, lenders are finding they can finance people with poor credit and this can be good for business.
Auto lending companies such as BlueSky Auto Finance are fully integrated with banks and lenders who specialize in providing subprime auto loans. When you apply for financing through the BlueSky website, you will be notified immediately if you have been approved for an auto loan. For more information on how the application process works and to apply, click here.