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Quick Notes: Experian State of the Automotive Finance Market Report, Q3 2012

Today Experian Automotive released their latest report on auto financing in the US.  You can read the press release here:  

Q3 State of the Automotive Finance Market

There is a ton of great information here.  Let’s look at the subprime market first. 

The Subprime Auto Finance Market

  • Non/Sub-prime auto loans for new vehicles:  24.84% of loans financed
  • Non/Sub-prime auto loans for used vehicles:  54.43% of loans financed

This represents year-over-year increases of 13.6% and 5.48%, respectively.  Obviously, this shows that the number of subprime car loans is on the rise, especially when it comes to new vehicles.  Many analysts have worried that the rise in such loans could lead to many of the same problems that subprime home lending caused, and even result in a second recession.  However, these increases don’t seem alarmingly high, and they certainly good for people who need to finance a car with lingering, post-recession credit problems.

The Most and Least Credit-Friendly Carmakers

If your credit has seen better days and you want to finance a new car, you might be interested in learning the carmakers who finance people with the highest and lowest credit scores. Here are the five automakers with the lowest average credit scores among their buyers.

  • Mitsubishi:  694
  • Suzuki:  704
  • Dodge:  718
  • Kia:  721
  • Scion:  723

Here are the five automakers who financed buyers with the highest average credit scores:

  • Volvo:  818
  • Lexus:  816
  • Acura:  813
  • Audi:  810
  • Infiniti:  810

These numbers should give you a better idea of which cars are easiest to finance, at least in terms of make.

Credit Scores Needed for a New Car Loan

Many consumers write in and ask us:  what credit score do I need to finance a new car?  Of course, that depends on a wealth of factors.  But thanks to Experian, we can get a pretty good idea by looking at the average credit score for a new vehicle loan:  755.  This shows that auto lenders are still being a bit more tight-fisted when it comes to credit these days, as the average back in Q3 of 2007 was six points lower:  749.  However, creditors are becoming less risk-averse.  After all, the average in Q3 2011 was 763.

Credit Scores Needed for a New Car Loan

Credit scores have also been dropping for used vehicles.  The average in Q3 was 668, which is an eight point drop from last year’s 676.  Without a doubt, it’s getting easier for people with nonprime credit to get approved for financing.

Average Auto Loan Amounts

The average amount financed for new and used vehicles has risen, at least slightly.

  • Average New Vehicle Loan:  $25,873
  • Average Used Vehicle Loan:  $17,359

In summary, it seems that subprime auto lending is on the rise, and lenders are generally being a bit more receptive to buyers with credit challenges.

About the Author

The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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