Experian Analytics recently reported a decline in automotive loan delinquencies. This situation may help car buyers who need bad credit auto financing. By learning more about these recent findings, car buyers with poor credit can take advantage of the situation.
Included in the Experian report is data regarding various types of lenders.
When applying for a car loan, it is helpful to understand the status of the auto loan market. This new information published by Experian may be helpful. The group found that first quarter 2011 auto loan delinquency rates have markedly improved in the 30 day-plus and 60-day plus categories.
The first performance category experienced an 11 percent decline, while the decline for the second was 13 percent.
In the 60-plus category, credit unions have the lowest rate of delinquency, just 0.96 percent. Captive auto lenders come in second with 1.06 percent and the 1.22 percent loan delinquency rate for banks ranks them third.
Fewer delinquencies means less potential write-offs for lenders, which is especially welcome in this market.
Lenders should continue to ease their guidelines on loans, based on these trends. However, interest rates are not expected to drastically change and a down payment will still be required for bad credit auto financing.
More customers are entering the subprime lending market, which allows lenders to continue being selective with loan approvals. Therefore, individuals with poor credit need to stay on their financial toes.
To secure bad credit auto financing, consumers should be aware of the information in their credit report and know their FICO score. The car they select should be reasonably priced and the monthly payment should not be more than 10 to 15 percent of gross monthly income.
Making a large down payment (15 percent or more) can help reduce monthly payments and increase chances of loan approval.
