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ReprintsDo we need an FHA-like agency to back car loans?
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More on those subprime customers I brought up the other day.
That subprime market is bigger than ever, industry analyst Jesse Toprak told me yesterday. The www.TrueCar.com analyst said that customers with credit scores of up to 680 are often now included in that group -- and that means the group has swelled to as much as 60 percent of the market.
"We're seeing many consumers and dealers giving feedback to us," Toprak said. "They have people with a real ability to pay their car loans that are being turned down simply because of their credit score."
It's more common than people think, Toprak said. And it's playing a role in keeping new-car sales seriously depressed.
It's "taking millions of potential buyers out of the market or forcing them to go buy a cheap used car," Toprak said. "We went from one extreme -- lending money to everyone who could breathe -- to being completely paranoid about lending. We need to find a nice equilibrium."
Toprak threw out an idea that he acknowledges will be roundly criticized by those concerned about federal spending and government intervention in private markets. What if there was an FHA equivalent, essentially government backing, for car loans? He thinks new-car sales would spike immediately.
"Without that kind of catalyst from the outside, we're going to deal with this crawling pace of recovery," said Toprak. "And the day of 14 million sales is still far off."
You can reach Amy Wilson at awilson@crain.com.
