According to Experian, interest rates on new and used vehicle loans have reached their lowest levels since 2008.
Average interest rates for new vehicle loans fell to 4.52% in the fourth quarter of 2011, down from 4.84% during the same period in 2010, according to Experian’s quarterly automotive credit analysis.
Average rates for used vehicle loans fell to 8.68% in the fourth quarter, which was slightly lower than 8.71% for the same quarter in 2010.
While average credit scores for new and used vehicle loans dropped, the percentage of loans to customers with nonprime, subprime or deep subprime credit scores increased during the last four months of 2011.
Experian found that consumers are also continuing to do a better job of repaying their loans. The 30-day delinquency rate fell from 2.98% in the fourth quarter of 2010 to 2.79% in the fourth quarter of 2011. The 60-day delinquency rate fell 0.79% to 0.72% for the same period.
Credit unions and other lenders have increased their willingness to make loans between six and seven years long, according to Experian. Another positive sign for the lending market is that the overall dollar volume of loans at risk dropped to $18.5 billion, a $1.862 billion drop from Q4 2010. Meanwhile, the total volume of open loans rose by $23.9 billion in Q4 2011 to $658 billion.
“Lenders are clearly on much more solid ground than they were two or three years ago,” said Melinda Zabritski, director of automotive lending at Experian Automotive. “With delinquencies and total dollar volume at risk down, lenders have been able to adopt more aggressive strategies. This tends to benefit everyone, from lenders to automotive retailers to the end consumer.”