Auto lenders loosened up on new-vehicle loans to credit-challenged consumers during the first quarter of this year.
Amid improving U.S. job growth and lower interest rates, banks and other loan providers increased lending in the subprime market by 11.1 percent over the first quarter of 2010, according to new data from Experian Automotive.
The shift is another sign that the U.S. auto industry continues to recover after the banking crisis of 2008, when U.S. lenders clamped down on credit to get risky loans off their balance sheets.
U.S. auto retailers have complained in recent months of the lingering difficulties getting some customer loans approved.
"We're seeing lenders come back into the market and showing more confidence about customers they might not have been willing to work with a year ago," said Melinda Zabritski, director of automotive credit at Experian. "There is definitely an improving outlook."
Experian is a credit-reporting service that compiles credit and financial data across the economy.
The new data suggest it is becoming easier to obtain a vehicle loan.
The average consumer credit score on auto loans was 766 points in the first quarter, according to Experian, down from an average score of 776 in the first quarter of 2010. The 2011 average is the lowest since the financial collapse in the fourth quarter of 2008.
The decrease indicates that more consumers with lower credit ratings are coming back into the market, Zabritski says.
It has helped that vehicle loan rates have declined. The average new-vehicle loan was 4.83 percent in the first quarter of 2011, down from 5.31 a year earlier.
Experian reports that the three types of subprime loans it monitors improved for the quarter.
In the nonprime market -- consumers with a credit score between 620 and 679 -- the share of loans was 10.57 percent, up from 9.81 percent in the first quarter of 2010.
In the subprime market, where credit scores average 550 to 619, loans increased to a share of 6.16 percent from 5.68 percent last year.
In the deep-subprime category, or consumers with credit scores below 550 points, the share increased from 1.38 percent in the first quarter last year to 2 percent this year.