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U.S. Lenders Live Life in the Fast Lane

May 26, 2011


An article recently published by Reuters examined the average accepted credit rating for automotive loans, and found that it is dropping this year.

U.S. lenders are noticeably lowering their standards, and the average credit scores for new car borrowers is now at its lowest level since late 2008, according to MSNBC’s reference to a recent credit bureau report.

Auto lenders are allowing lower scores more readily because recent statistics show borrowers most often not falling behind on payments.

As reported by MSNBC:

“The average credit score for new car loans fell 10 points in the first quarter to 766, the same level as the fourth quarter of 2008… Thirty-day delinquency rates fell to 2.52 percent, the lowest level since the fourth quarter of 2008…” and “the amount of loans 30 or 60 days delinquent fell $3.3 billion from a year ago to $16 billion.”

Furthermore, many borrowers are being given an average extra month to repay outstanding loans. The average term reached 58 months for used cars, and 63 months for new cars.

Riskier lending is becoming more common as the auto market sees continued recovery.

Read the full Reuters story published on MSNBC here.

What do you think: Will this more lenient lending trend help to further stimulate the automotive community, or will it open the door for more credit issues in the future if borrowers don’t pay?

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