The credit pipelines for auto loans are thawing and that means more consumers are getting access to the cash they need just in time for car-shopping season.
A new analysis of automotive credit from Experian released Monday shows that average credit scores of car buyers dropped to near pre-recession levels in the first quarter of 2012. To put that in real terms, the average credit score in Q1 was 760 for new cars (down six points) and 659 for used cars (down four points).
Another upside the report found was that interest rates on auto loans were down for both new and used vehicles to 4.56 and 9.02 percent, respectively. Credit scores can have a big impact on the amount of money borrowers pay in interest. Take a look at our breakdown of the extra costs of bad credit on auto loans and how they add up.
The Q1 report is overwhelmingly good news for car shoppers, as these factors are all signs that the credit markets are opening up to attract more borrowers who may not have been able to get a loan during the credit crunch.
“Our report shows automotive lending is as healthy as it’s been since the market bottomed out in 2008,” Melinda Zabritski, director of automotive credit for Experian, said in a press release. “With consumers doing a good job of paying back loans on time and the percentage of dollars at risk reaching its lowest point in six years, lenders are able to extend terms and provide lower rates. This thawing of the credit pipeline has been good for everyone, from consumers to lenders to automotive retailers.”
Image: Jeremy Vandel, via Flickr