Unfortunately for those with bad credit, more car shoppers with prime credit scores are being approved for car loans right now and the number of those with sub-prime credit getting auto loans has dropped.
According to CNW Research’s preliminary November data, 85.7% of those who purchased a car this month had prime credit scores, which was the highest rate since December 2008’s 85.9%.
Car shoppers with near-prime credit scores amounted to between 10 and 12% of buyers in November.
Fewer sub-prime car shoppers were approved in November, with only 3% of car buyers falling into this category. When compared to July 2006, about 16% of all new car sales were from customers with sub-prime credit scores. The 3% in November is also much lower than the 2009 high of 8.4% in April.
The reason fewer sub-prime applicants are being approved for auto loans is that banks are scared to lend to anyone who has less-than-perfect credit.
CNW Research predicts that sub-prime auto loans will “show some significant growth based on an incrementally rebounding economy” over the coming year.
CNW also points out in its analysis that sub-prime buyers used to account for nearly two million new-car sales a year. “Without sub-prime, the industry will have an extraordinarily difficult time hitting 15 million, let alone 16 million units,” CNW Research says.