Editor’s note: This article has been corrected to reflect Experian revisions to its data.
The banking industry relaxed its standards for auto loans slightly during a third quarter that showed reduced consumer demand, according to a Federal Reserve survey of senior loan officers.
Forty-six auto lenders polled held auto lending standards constant during the quarter. But five lenders — four of which the Fed considered large banks — said they eased up "somewhat," and one large bank had loosened "considerably." Only one large bank had tightened standards somewhat. The Fed classified the results as a "modest" net expansion of credit to consumers.
Asked about specific policy changes in another series of questions, most of the banks that responded reported no change during the third quarter. However:
- Three large banks described easing somewhat on the loan lengths they'd accept.
- Nine banks, including six large institutions, narrowed the spread somewhat between the interest they paid and the interest they charged customers, indicating a growing competitiveness on rates. Only one large bank said it had widened this spread.
- One bank said it reduced its down payment requirements.
- Four banks, including three large ones, said they had somewhat lowered the minimum credit score they'd accept. One large bank had tightened this somewhat.
- One large bank and one other bank said they were somewhat more open to auto loans to customers who didn't meet their bank's "credit scoring thresholds."
Banks opened up their lending during a quarter that saw desire for auto loans slacken.
Though 34 loan officers reported no change in demand, 13 banks, including four large ones, felt demand had "moderately" weakened. Two large banks and two other institutions felt demand had grown moderately, and one large bank had received "substantially" stronger demand.
The most recent Fed quarterly poll of banking credit trends received responses from 70 banks, though not every institution answered every question or was involved in auto lending.