Fewer Sub-Prime Buyers Getting Approved For Auto Loans

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.