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Car Buyers' Credit Scores Near Pre-Recession Levels

Gone are the dark days of needing near-perfect credit to buy a new car.

By Claire_Martin May 31, 2012 7:04AM
In the thick of the recession, in early 2010, auto loans were hard to come by for all but those in the most elite credit-score bracket. Those days, the average score for new-car financing was 776 out of 850. Now, according to credit reporting agency Experian, new-vehicle financing is finally approaching pre-recession levels, with the average score settling in at 760 in the first quarter of 2012. 

“Our report shows automotive lending is as healthy as it’s been since the market bottomed out in 2008,” Melinda Zabritski, director of automotive credit for Experian, was quoted as saying in a press release.

The Experian report also showed that there's been an increase in the number of loans going out to those with less-than-perfect credit. Nonprime, subprime and deep-subprime loans jumped by 11.4 percent in the first quarter of 2012.

Adding to the looser lending climate is the fact that American car owners in increasing numbers have been making their payments on time. Starting in early 2010, the market began seeing fewer delinquencies. At that time, Experian President Scott Waldron predicted good things to come for consumers. "When fewer people are delinquent on payments, it is good for lenders," he said, "which should translate into positives for the auto industry down the line.” 

In fact, auto repossession rates plummeted 37 percent in the first quarter of 2012, and 60-day delinquencies dropped by 12 percent. 

“[C]ar shoppers definitely found more favorable conditions for their vehicle loans,” said Zabritski of the 2012 credit news. “A reduction in average credit scores, lower interest rates and a lengthening of loan terms are all very good signs for the market."

The question now is just whether the trend will continue. 
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