The credit crisis is hitting everyone, even those with prime credit ratings. Fewer buyers are getting approved for auto loans across all credit categories and those who get approved are finding it harder to get financing.
CNW Research shows that those with subprime credit scores had the hardest time trying to get approved for an auto loan. In the first three quarters last year, 67% of subprime applicants were approved. In the same period this year, only 23% were approved for an auto loan. And to even get approved, subprime applications had to be shopped through 7.9 institutions versus 4.4 in 2007.
Even prime borrowers had trouble getting approved for an auto loan. Last year, 90% were approved, versus only 81% in the first three quarters this year. Prime applications went to 3.2 auto lenders this year prior to approval, compared with just 1.8 last year.
In the near-prime credit category, the approval rate was 77% versus 86%. Near-prime applications had to be sent to 3.8 lenders on average, compared with 2.6 in the previous year.
"The share of applications receiving final approval for an auto loan has dropped for all three credit categories — prime, near-prime and subprime," says Art Spinella of CNW Research.
"Even a prime customer is having a significantly harder time getting a loan approval. And those loans that are approved have to be submitted to more financial institutions."