When it comes to buying cars, it should come as no surprise that pricier vehicles tend to be favored by those who have high credit scores, and new research suggests just how much a vehicle’s price tag plays into the buyer’s ability to obtain financing for it.
Generally expensive cars come with significant credit qualifications because of the size of the price tag involved, and Volvo topped the list for average credit scores granted new loans in the third quarter of the year, according to new data from the State of the Automotive Finance Market from Experian Automotive. The average customer who received authorization for a loan agreement on a Volvo had a credit score of 818, up slightly from second-place Lexus’s 816. At 813, Acura rounded out the top three, while Audi, Infiniti, Jaguar and Porsche weren’t far behind at 810 each. To get a free credit score, try the free Credit Report Card, which can give you an idea of what’s keeping you from joining the credit elite.
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Meanwhile, the auto make with the lowest average credit score that was approved for a loan was Mitsubishi, at just 694, the report said. That was a slight step up from second-lowest Suzuki, at 704, and well below Dodge (718), Kia (721), and Scion (723), which comprised the remainder of the five lowest.
The average credit score needed to obtain a new vehicle, though, slipped eight points to 763 on a year-over-year basis in the third quarter, which may indicate that lenders are now more willing to grant financing to consumers who may have had difficulties qualifying in the past, the report said. That trend has been reflected in other types of lending as well, which puts those who have suffered credit missteps in the past in a better position to begin borrowing once again.
Instances of both 30- and 60-day auto loan delinquency also slipped during the third quarter despite the fact that lenders’ credit standards slackened, which might serve to encourage more broadening of requirements in the future, the report said. However, it’s important to note that while consumers are still making more timely payments into their various accounts, credit qualifications have still not relaxed to points seen prior to the recession.
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Improving conditions for obtaining car loans may be a boon to many consumers, but experts say that true economic recovery cannot begin in earnest until mortgage lenders ease their currently very high standards.
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