Subprime Car Loan Rates Higher than Pre-Recession Levels
It may be hard to believe, but subprime car loan interest rates are higher today than before the recession. Prior to the economic downturn, approximately 25% of all new car loans were subprime, and today, according to Lacey Plache, Chief Economist for Edmunds.com it’s slightly higher.
Many are asking if the increase in subprime car loans is a sign of unpleasant things to come, but Ms. Plache doesn’t think so. “At first glance, it looks like we didn’t really learn our lessons from the subprime housing bubble,” she says. “But I think it’s too soon to have that fear.”
Plache says standards for subprime car loans have become overly stringent. Many consumers are gainfully employed and considered reasonable credit risks, with only minor dings on their credit score placing them in the subprime car loan category. Plache says, “These people are now getting access to the credit market again.”
Other Subprime Car Loan Data
- Interest rates for new car loans fell to 4.27%, from 5.25%
Average monthly used car loan payments stayed flat at $350
Average credit scores for new car loans in Q3 2013 dropped to 753 from 755 in Q3 2012
Average credit score for subprime car loans remained steady year-over-year at 668
Average amount financed for used vehicles rose to $17,900 in the third quarter of 2013 from $17,577 in the third quarter of 2012
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