Auto loan rates for new and previously-owned vehicles have dropped to their lowest levels in four years said Experian Automotive in its latest quarterly report.
Driven by increased lending to subprime borrowers, the average rate on a new car loan sat at 4.52 per cent in the fourth quarter of 2011, a drop of 0.32 per cent from 12 months previously. Though rates for used cars are nearly twice as high as rates for new cars, they too decreased to settle at 8.68 per cent in the same quarter, a reduction of 0.03 per cent from the last quarter of 2010.
Showing that more and more subprime auto loans are making their ways into the hands of car buyers, the report stated that the average credit score of a borrower dropped with previously owned car buyers possessing a 670 credit score, a reduction of nine points in 12 months, and new car buyers holding a 761 score, a decrease of six.
Talking about the increasing willingness of lenders to provide credit, Melinda Zabritski, director of automotive lending at Experian Automotive, said, “The improved automotive lending market is good news for consumers in the market to buy a vehicle. The confluence of low interest rates, longer loan terms and an increase in loans outside of prime provide a great opportunity for more people to find a vehicle that suits their needs.”
Find out more about bad credit auto loans here.