Consumer Car Buying Advice Blog

Experian Automotive has released its second quarter 2010 auto delinquency report showing a drop in the 30 day delinquency rate and more good news for people hoping to finance their next vehicle using car loans with bad credit.

You should know

Before getting into today’s news, if you have bad credit you should know that Auto Credit Express has helped thousands of applicants, just like you, reestablish their auto credit and raise their credit scores. By filling out our online auto loans for bad credit loan application and avoiding a tote the note dealer, consumers with bad credit can begin a new chapter in their lives by getting approved at one of our affiliate dealers for a second chance auto loan. Along with paying the rest of their obligations on time, they are able to eventually qualify for better interest rates on everything from their next car loan to other types of credit, as well.

We are also upfront about what it takes to do this. For example, choosing the wrong kind of vehicle can stretch the budgets of many credit-challenged consumers and could result in repossession. If this happens, the only remaining choice for most buyers is a tote the note car dealer. It also means that rebuilding your car credit has to be put on hold for at least a year, since even bad credit lenders will only consider applicants with a repossession on their credit report that’s more than a year old.

It also means keeping our applicants up to date on what is going on in the auto lending industry, such as Monday’s news from Experian Automotive.

Experian second quarter report

Yesterday, Experian Automotive released its latest report on automotive lending – this time dealing with auto loans in the second quarter of 2010.

According to Experian, the national 30-day auto loan delinquency rate fell 5.88 percent year over year from the second quarter of 2009 to the second quarter of 2010. The 60-day delinquency rate fell even further, dropping 11.85 percent in the same comparative quarters.

Experian’s analysis

“Seeing a drop in delinquencies year-over-year is a positive sign for both the lending and automotive industries,” said Scott Waldron, president of Experian Automotive. “The fact that we’ve seen a drop for the second consecutive quarter is an indication that there could be a light at the end of the tunnel for the economy.”

Subprime lending trends

Buyers in the upper subprime segments also have something to cheer about: according to Experian, “The percentage of nonprime and subprime loans for new vehicles grew a combined 4.5 percent, from 16 percent in Q2 2009 to 16.73 percent in Q2 2010.”

The report does go on to point out, however that loans in the deep subprime tier dropped from 1.56% in the second quarter of 2009 to 1.48% in the second quarter of 2010.

“It appears as though lenders are testing the waters with customers who have less than stellar credit,” said Melinda Zabritski, director of automotive credit for Experian Automotive. “While lenders have not loosened their criteria to the levels we saw three years ago, we do see an upward movement in loans to those middle risk tiers. This could be a very positive sign for the auto industry, as it could open loans to a wider group of potential customers.”

The Bottom Line

The bottom line for bad credit auto loan applicants is that the drop in loan originations has halted and that subprime lenders are beginning to increase the actual number of bad credit car loans they are writing. At the same time, these lenders are only increasing loan originations to the “better” bad credit customers. When comparing year over year car loan environments, this means that an individual with bad credit and a given credit score will still be subjected to higher interest rates with that FICO score (probably with a shorter loan term) and will be asked to put down a larger down payment than in, say, 2007. At the same time, those customers with the lowest credit scores will still find it difficult to get approved for a loan.

At Auto Credit Express, our advice to consumers seeking bad credit car loans remains the same as it has been the past 2 years:

•    Know your credit score and what’s contained in your credit report
•    Plan on coming into the loan with at least 10 percent down in cash or trade equity
•    Keep the loan term as short as possible
•    Buy a compact of midsize vehicle and put off looking at your dream car until after you’ve reestablished your credit.

Give us a shot

If you are serious about reestablishing your car, we suggest visiting www.autocreditexpress.com. Through our affiliate dealers, we have helped thousands of people with bad credit finance a new or reliable low mileage used car. More importantly, the car loans with bad credit that finance these vehicles have started these people “on the road” to renewing their auto credit and establishing a good credit history.

We make no promises in regards to guaranteeing you an approval, but we are associated with some of the best special finance departments across the United States, placing you with a dealer that not only knows special finance, but one that is as close as possible to where you live.

So why not begin the process right now by filling out our secure online bad credit car loan application to see what we can do for you.

Tags: auto credit, auto delinquency report, Bad Credit, car credit, credit, credit auto, credit report, credit score, experian, experian automotive, fico, FICO score, repossession, tote the note

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