In a recent quarterly analysis, Experian reported that consumer credit scores for auto loans have dropped to near pre-recession levels, and lower interest rates and increased loan terms have improved buying opportunities.
The average credit score for financing a new vehicle dropped six points to 760, and it dropped four points to 659 for used vehicles. In the first quarter of 2008, credit scores were at an average of 753 for new vehicles and 653 for used vehicles.
The report also found that interest rates were lower year-over-year and loan terms were longer, giving consumers access to lower monthly payments. In addition, there was an increase in the average amount financed, rising by $589 for new vehicles and $411 for used vehicles in the first quarter of 2012.
In the past six months, credit has been generally more available to prime borrowers and borrowers "with less-than-perfect credit histories," said Paul Taylor, the chief economist with the National Automobile Dealers Association. Interest rates are also low, which has helped more people qualify for a new-car loan, he said.
During the recession, lending was narrowed to those with strong credit ratings. Subprime borrowers were in the most difficult position for finding credit, he said.
Banks are being aggressive right now, said Andy OHarrow, the finance manager at Milton Ruben Toyota.
"The banks that are backed by the manufacturer are the most aggressive. They'll do lower credit scores, better terms and low interest rates. Things have really loosened up, and things are pretty normal for us now," OHarrow said.
He said that auto loans are not driven as much by credit scores. They're more structured around the deal, such as the amount of the down payment and length of time for financing.
Auto loans are more within reach than in the past few years, said Bud Lawrence, the general manager at Bobby Jones Ford Lincoln. Lower interest rates correlate with lower payments.
"In some ways it would certainly make it easier to get credit because the customer may qualify better. When rates are so low ... the bank may be willing to loan because the payment fits. They can make it match the customer's income," he said.
Brian Winters, general manager at Gerald Jones Honda, said that lending has "loosened up quite a bit" in the past eight to 10 months. American Honda Finance Corp. is offering 0 percent interest rates almost across the board, he said.
"We're seeing a lot of those customers that were having trouble getting approved for credit a year ago suddenly back in the market, and we're able to get those folks approvals through the lenders," Winters said.
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