Chances of Poor Credit Car Loans Get Better

TransUnion has released its second quarter 2013 auto delinquency report that shows an increase in balances and in the number of loans to borrowers with poor credit
Chances of Poor Credit Car Loans Get Better
Our experience

The percentage of delinquencies remains flat while the number of auto loans to car buyers with questionable credit continued to rise during the second quarter of 2013.

Here at Auto Credit Express we continue to view this news as good for most consumers with rough credit in need of a car loan. We base this on the fact that for over twenty years we’ve been helping car buyers with less than perfect credit searching for online auto loans find the kinds of new car dealers that can offer them the best opportunities for auto loan approvals.

At the same time we feel that it’s important for applicants that find themselves in challenging credit circumstances to understand the lending setting they will face – something that’s covered in the most recent quarterly report from TransUnion that addresses automotive lending delinquencies during the period of April through June of 2013.

In particular this should help answer the question, “How hard is it to get a car loan with bad credit?”

TransUnion second quarter report

Earlier today TransUnion released its latest findings covering automotive lending –dealing with auto loans in the second quarter of 2013. This report, according to TransUnion, “is based on anonymized credit data from virtually every credit-active consumer in the United States.” The results, then, should fairly accurately reflect current automotive lending.

According to TransUnion, the national auto loan delinquency rate (borrowers 60 or more days past due) “remained relatively flat year over year moving from 0.79% in Q2 2012 to 0.80% in Q2 2013. On a quarter-over-quarter basis, the auto loan delinquency rate experienced an 8-basis point drop from 0.88% in Q1 2013.”

On a quarter over quarter comparison, “Auto loan balances continue to increase, jumping more than 4% between Q2 2012 ($12,875) and Q2 2013 ($13,435). Every state except for Michigan experienced an increase in average auto loan balances during this timeframe.”

“Our second quarter data are favorable for the auto loan market, as delinquencies remained largely unchanged while auto loan debt rose once again in the last year,” said Peter Turek, vice president of automotive for TransUnion. “It’s encouraging to see consumers take on more auto debt while delinquencies remain low. Consumers clearly are more confident in managing additional debt.”

Subprime lending

The report also contained some good news for car buyers with credit issues:

According to TransUnion, “While subprime borrower debt increased more than 7% in the last year, delinquency levels for this segment remained about the same, moving from 4.94% in Q2 2012 to 5.02% in Q2 2013. As a percentage of borrowers, the subprime group did not change from last year, still constituting 14.9% of all new accounts.”

“This is a positive sign since increased balances for the subprime group indicate that they are receiving new loans. The fact that the increase in delinquencies is only a minor one is especially important, as we often find that borrowers who have problems making payments do so within the first year of a loan,” added Turek.

Tips for buyers in challenging credit situations

With this news in mind, here is our advice for car buyers with past credit issues:

• Know your FICO scores as well as the information contained in your credit reports
• Plan on contributing a minimum of 10 percent down in cash or actual trade equity to your auto loan
• Keep the loan term as short as possible
• Buy a subcompact, compact or affordable midsize vehicle, putting off considering any other type until after good credit has been reestablished.

The Bottom Line

As it currently stands, a broader credit range of car buyers now face their best chances in more than five years of getting an application approved for car credit.

Even more good news is the fact that Auto Credit Express matches people that have experienced credit difficulties with new car dealers that can offer them their best opportunities for approved auto loans.

So if you’re ready to reestablish your car credit, you can begin now by filling out our online auto loan application.

Posted on August 20, 2013 by in Bad Credit
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