Credit bureau Experian has revealed that auto loans to subprime borrowers grew strongly during the third quarter of 2011, with lenders approving a broader range of credit scores for car financing.
According to the group, subprime and deep subprime auto loans were up by more than 17 percent in the third quarter when compared to 2010. The average credit score for an approved loan also fell by six points for both new and used cars.
As the economy recovers and borrowers default less on their loans, lenders apparently have more confidence in buyers' ability to pay them back, leading to the increase.
"The automotive finance industry is continuing a steady climb to good solid footing," said Melinda Zabritski, director of automotive credit for Experian Automotive. "Consumers continue to do a better job of repaying loans, while at the same time, many of the most risky loans from 2007 and 2008 are now off the books. These factors combine to lower the total volume of dollars at risk and give lenders more confidence in loosening their overall lending standards."
Those in the subprime credit category likely do not have a lot to spend on car repairs and other potentially expensive costs, which is why routine auto maintenance, like oil changes, are extremely important.