Loans.org Says Auto Financing Returning to Pre-Recessionary Standards
In a recent survey, auto loan lenders have reported that they are easing their lending standards, signaling their return to a pre-recessionary mentality. Now those with poor credit may find it easier to obtain car loans.
RANCHO CUCAMONGA, CA, May 09, 2012 /24-7PressRelease/ -- A recent bank survey done by the Federal Reserve revealed that lenders have begun to ease up on their standards for car loans, signifying that the auto financing industry is starting to return to pre-recessionary standards, according to Loans.org. Pre-recessionary standards in the car financing industry was very relaxed, with credit scores and financial history impacting borrowers' eligibility far less than we've seen in the last few years.
"They were pretty much lending to anyone with a pulse," explained Jesse Toprak, an industry analyst with Truecar.com, according to CNN Money.
But when the United States underwent the 2008 recession, those in the market for car loans encountered more stringent standards.
"Auto finance as a whole has become more conservative because of fallout from the subprime housing debacle and subsequent economic downturn," said Tom Libby, an analyst with J.D. Power and Associates, reported the Federal Reserve Bank of Minneapolis back in 2009. "Everybody has tightened up."
However, the recent April 2012 Federal Reserve survey of large banks and non-bank lenders shows that auto loan originators are starting to reverse that trend.
Over 23 percent of large banks said they have eased up on their lending standards in the last three months alone. When combining the responses from non-bank lenders with large banks, the Federal Reserve reported that 17.3 percent of their sampling has begun to ease up on lending standards.
Those numbers are illuminated by the fact that the average credit score for borrowers purchasing new and used vehicles dropped by six and nine points respectively at the end of last year, according to Experian--a clear indication that pre-recessionary subprime standards are making a comeback.
For more information on debt collection, go to http://loans.org/auto to find a frequently updated library of financing information. Additionally, prospective loan applicants can access a free-to-use quote-comparison generator that is designed to help consumers receive the lowest interest rates possible.
To access the full story on the reduced auto loan qualifications, readers can follow the "News" link at the top of any page on the site.
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