More auto loans are being given to consumers with good credit, according to Experian Automotive’s third quarter analysis. This should come as no surprise to anyone, especially since lenders have tightened their standards and criteria during the recession.
On a positive note, Experian Automotive says the U.S. automotive lending industry showed signs of stabilization during the third quarter of 2009.
“We are seeing signs of stabilization in the automotive lending market that could spell good overall health for the auto industry in the long run,” said Scott Waldron, president of Experian Automotive, in a statement. “Lending institutions are making less risky loans right now. As some of the higher-risk loans from a few years ago come off the books, lenders will be in a much better position to serve the automotive market.”
So what exactly is considered good credit? What credit score do you need to get a car loan right now?
Melinda Zabritski, director of Automotive Credit for Experian Automotive, told the Detroit Free Press that 83% of all auto loans approved between July and September went to customers who have credit considered prime or better.
Experian’s “prime” credit score ranges from 680 to 739, “super prime” is 740 and higher and “subprime” is 550 and lower. Credit scores between subprime and prime (in this case, 551 to 679) are generally called “near prime” in the industry.
Experian Automotive found that the average credit score for new vehicle auto loans in the third quarter was 775, up from 762 in the third quarter of 2008. The average new vehicle auto loan length dropped from 63 to 62 months when compared to the third quarter a year ago.
If you’re in the market for a used car loan, the average credit score being approved increased to 684 in the third quarter from 670 in the third quarter of 2008. The average used vehicle car loan length decreased from 59 months in the third quarter of 2008 to 57 months in the third quarter of 2009.
So which lenders are giving the most auto loans to car shoppers right now?
For new cars, Toyota Financial Services had the highest market share in the third quarter at 11.2%, followed by Chase Auto Finance at 11.1%, GMAC at 9.1% and Ford Motor Credit at 7.1%.
For used cars, Wachovia Dealer Services had the highest market share at 5.7%, followed by Chase Auto Finance at 4.5%, Toyota Financial Services at 3% and Capital One Auto Finance at 1.8%.