More consumers were able to make their car loan payments on time the past few months. While this is good news, auto loan lenders are still being cautious about who they give a loan to, as the average credit score for new and used car loans was up the past few months.
During the first quarter of this year, 30 and 60-day delinquencies dropped for the first time since 2007, when Experian Automotive started reporting on quarterly auto loan delinquencies.
The 30-day car loan delinquency rate fell 1.06 percent from the first quarter of 2009 to the first quarter of 2010 (2.82 percent to 2.79 percent), according to Experian Automotive’s first quarter automotive finance market analysis. The 60-day auto loan delinquency rate dropped from 0.79 percent in the first quarter of 2009 to 0.78 percent in the first quarter of 2010.
If you’re in the market for a car and a car loan in the next few months, you may be wondering why you should care about auto loan delinquencies. When more consumers are delinquent on their auto loan payments, this causes lenders to be more cautious and less willing to lend, since they aren’t getting repaid on time by their current customers. When delinquency rates drop, this means more drivers are paying their car loans on time and this allows lenders to approve more auto loans.
More owners paid their auto loans on time for cars like this Ford Fusion Hybird, in the first quarter of 2010.
Although many analysts say the economy is improving, Experian Automotive says that lenders are still being cautious when it comes to approving auto loans. The average credit score for a new car loan in the first quarter of 2010 was 776, up three points from the first quarter of 2009. The average credit score for used auto loans increased from 661 in the first quarter a year ago to 665 in the first quarter of this year.
This means that you still need a good credit score to get an auto loan or lease right now. There are some specialty programs and lenders that are focusing on car shoppers with bad or low credit scores, so don’t assume you will get denied. But be prepared to pay a much higher interest rate if your credit score isn’t stellar.