Consumers are finding that getting approved for a car loan is easier today than at any time since October 2008. More specifically, consumers with good credit are the ones who aren’t having problems getting auto loans.
But sub-prime car shoppers are not as lucky. Consumers with less-than-perfect credit are seeing improved chances of being approved for an auto loan, but fewer than one in five are actually approved, according to CNW Research data. Although this is up since October 2008, it’s nowhere near the 58% approval rate sub-prime buyers saw in January 2008.
In comparison, shoppers with prime (750+) FICO scores are being approved 89.5% of the time for new-car auto loans. This is up more than 12 percentage points since October 2008.
Car shoppers with near-prime (about 650-749) credit scores are being approved 82% of the time for a car loan, according to CNW’s preliminary July data. This is also up from last October’s 73.7% approval rate.
The bottom line is that consumers with sub-prime credit scores are going to have a difficult time finding an auto loan to buy a car. Job stability and verification of income are factors that can help consumers with bad credit obtain a car loan.
If you’re in the market for a new car and have bad credit, you may have to shop around and apply to more lenders to get approved for a car loan.