New and used vehicle shoppers are being approved for auto loans with lower credit scores, in a trend that has continued for months. Auto lenders are loosening their criteria and approving consumers for auto loans at lower credit score levels.
Preliminary data for April shows that the average FICO score for consumers who took out an auto loan for a new vehicle in the first 10 days of the month has fallen to 673.7, according to CNW Research. More than 14 percent of new car buyers had a FICO score less than 670.
On the used vehicle side, the average FICO score so far in April is 606.8, with almost 40 percent of used car buyers having a FICO score less than 670. CNW says that used vehicle sales for April are slated to be up 10 percent compared to April 2010 because auto finance companies are more willing to give auto loans to a broader spectrum of potential used car buyers.
One of the biggest problems during the recession was that lenders were very weary to lend to consumers with less-than-perfect credit scores. If auto lenders continue to approve more consumers at lower credit score levels, more shoppers will be able to get into a new or used vehicle, even if they don’t have a prime credit score, which is good news for a lot of vehicle shoppers.