News & Resources

Automobile loans increasing in popularity

Jul 28, 2012 Philip Burgess

The market for automobile loans was negatively impacted, like most industries, during the economic recession. However, it seems as though lenders are increasingly giving out car loans to consumers, even to those poor credit, as alternative credit data is being used to determine risk. According to Michigan Live, a recent study by a credit reporting bureau found that within the past three years, auto loans have nearly doubled since 2009, reaching $52.5 billion in March of this year from $26.9 billion. Industry experts believe this increase is due to the fact that lenders are relying on a subprime individual's alternative credit score, which looks at non-traditional credit data, including employment and criminal records, reports the news source. Many auto sector professionals think that the increase in lending will not diminish within the next years, states The Associated Press. Lenders are now less hesitant to give out money to subprime borrowers as both parties have lowered their debts, making loans less risky than before. These new numbers and increases in giving out funds are almost reaching the same levels they were before the downturn in 2008, says the AP.