Car shoppers who are in the market for a new or used car loan have some good news coming their way. Auto loan lenders are approving car loans for consumers with lower credit scores. Since January, the average FICO score of new and used car shoppers who received an auto loan has steadily fallen, according to data from CNW Research.
In January of this year, the average FICO score for a new car shopper who received an auto loan was 729.16. After gradually declining the following eight months, the average FICO score for new car shoppers who were approved for a car loan in September was 708.52. This means that lenders could be loosening their new car loan standards a bit.
Used car shoppers were approved for auto loans with an average FICO score of 630 in September, which is 40 points lower than the average approved score in January.
When looking at used car shoppers, the numbers follow the same trend. CNW found that used car shoppers who received an auto loan in January 2010 had FICO scores of about 670. The scores gradually dropped over the next eight months as well. In September, used car shoppers who received a car loan had an average FICO score of about 630.
CNW Research said that based on the patterns and trends it found, it expects financial institutions to continue to loosen credit in order to "meet both a demand by government agencies to help kick start the economy and consumers who are in growing need of replacement vehicles that have gotten both older and less reliable."
Remember, shoppers with the best credit scores still receive the lowest auto loan rates. Although car shoppers are being approved for auto loans with lower credit scores, it doesn’t necessarily mean the interest rate is better. Shoppers with lower credit scores usually receive higher auto loan rates.