A growing number of potential new car buyers can't find loans and are settling for used vehicles.
The struggling economy, job losses and stricter lending criteria have pushed more consumers into loans for used vehicles, rather than new, according to a new report by Experian Automotive, which also found the number of delinquent loans continuing to creep upwards.
Experian’s quarterly analysis of the automotive credit market indicates that used vehicle loans accounted for 68.13% of all automotive loans in the first quarter of 2009, up from 64.3% of all automotive loans in the first quarter of 2008. Share of loans for new vehicles fell to 31.87% in the first quarter of 2009, compared with 35.7% in the first quarter of 2008, according to Experian.
“Banks, credit unions and captive finance companies appear to have tightened their lending criteria as they look to mitigate risk,” said Melinda Zabritski, director of automotive credit for Experian Automotive.
“Loans are still available, but lenders are changing terms. This is pushing some consumers out of the new vehicle market and into the used vehicle market. Some finance companies that specialize in subprime loans have seen their share increase as traditional lenders move away from riskier loans,” she said.
In addition, independent used vehicle dealers — those dealers not affiliated with a specific manufacturer — were the biggest winners in the first quarter, seeing their share of used vehicle loans rise from 31.58% in the first quarter of 2008 to 34.97% in the first quarter of 2009. Independent dealers typically serve customers with lower credit scores and are gaining share as traditional lenders tighten their loan criteria. (more…)