Auto loan rejection rate drop to 3.3 percent
Posted on Sunday, July 26, 2015 at 6:14:41 PM
Looking for auto financing? Well, you probably won't have much trouble if you are.
Federal Reserve Bank of New York data shows that the rejection rate for auto loans over the last 12 months has dropped substantially, from 10.3 percent in October 2013 to 3.3 percent in June. Last month's rate is the lowest it has been since the bank began collecting data two years ago.
One of the reasons why credit has grown looser is a resurgence of interest in securities backed by automobile debt, according to Bloomberg. This includes debt to risky borrowers. Subprime loans fed close to $13.2 billion of bond sales on Wall Street this year.
Many risky borrowers have found that they can reenter the market using long-term loans that make monthly payments more affordable. For both new and used vehicles the average term for a car loan has stretched past 60 months, according to an Experian Automotive report.
The availability of auto loans has helped push the market to new heights as car sales continue to rack up. And it's not just subprime loans either. Experian found that, across the board, from deep subprime to super prime, loans are up from last year.