Automotive lending continued to rebound in the second quarter, with loan delinquencies falling for the second consecutive period, Experian Automotive said in a new report.
And in another sign credit is becoming more widely available to new-car shoppers, lenders made a slightly higher percentage of auto loans to nonprime and subprime customers during the second quarter.
Experian Automotive said the 30-day delinquency rate for auto loans fell from 3.07 percent in the second quarter of 2009 to 2.89 percent during the three months that ended June 30. And the number of auto loans delinquent 60 days or more fell from 0.8 percent in the second quarter of 2009 to 0.71 percent in the latest period.
“A drop in delinquencies year over year is a positive sign for both the lending and automotive industries,” Experian Automotive President Scott Waldron said in a statement. “The fact that we've seen a drop for the second consecutive quarter is an indication that there could be a light at the end of the tunnel for the economy.”
Lenders also continue to loosen credit terms, with a higher percentage of loans being extended to customers with nonprime and subprime credit ratings, Experian said.
The percentage of nonprime and subprime loans made for new vehicle purchases grew from 16.0 percent in the second quarter last year to 16.73 percent in second quarter of 2010.
But lenders continue to be cautious when extending credit for new-vehicle loans to the riskiest shoppers. Experian said the percentage of these deep subprime loans dropped from 1.56 percent in the second quarter of 2009 to 1.48 percent in the most recent period.
“While lenders have not loosened their criteria to the levels we saw three years ago, we do see an upward movement in loans to those middle-risk tiers,” Melinda Zabritski, director of automotive credit for Experian Automotive, said in a statement. “This could be a very positive sign for the auto industry, as it could open loans to a wider group of potential customers.”
Experian said the average credit score for a new-vehicle buyer fell from 774 in the second quarter of 2009 to 772 in the latest period. The average credit score for used-vehicle buyers rose to 679 in the most recent quarter from 677 in the second quarter of 2009 .
The average amount of a loan financed for a new vehicle jumped by $883, to $25,222.