More subprime buyers getting auto loans
DETROIT (AP) — Banks and finance companies continue to write more auto loans to subprime buyers, but those buyers' average credit scores remain higher than before the recession.
Experian Automotive said Tuesday that 43 percent of new and used car loans written in the fourth quarter of 2012 went to subprime buyers, up from 41.5 percent in the same quarter of 2011. The proportion of subprime buyers fell as low as 36 percent in 2009.
Subprime buyers are those with credit scores below 680.
The average credit score for a new vehicle loan in the fourth quarter was 755, the same as in the third quarter. That's lower than last year's average of 761, but not quite as low as the pre-recession score of 749 in the fourth quarter of 2007. The average credit score for a used vehicle loan was 665, down from 670 in the fourth quarter of 2011 but still slightly higher than the 2007 average of 661.
Low interest rates are among the factors drawing buyers after historic low sales in the recession. U.S. sales reached 14.5 million in 2012, their highest level in five years.
Experian said the average interest rate for a new vehicle loan dropped to 4.36 percent in the fourth quarter, down from 4.52 percent the prior year, while the average interest rate for a used vehicle loan fell from 8.67 percent to 8.48 percent.
The average new car loan was $26,691 in the fourth quarter, up $272 from the prior year.