Auto Loan Approval Ratings Sink for All Credit Categories
BANDON, Ore. — Even vehicle shoppers with prime credit ratings are having a tougher time getting their auto loans approved by lenders, CNW Research indicated this morning.
This trouble has hit borrowers across the board for all credit categories. The percentage of all auto loan applications eventually approved by lenders has declined for all three credit categories.
The most significant dip occurred in the subprime approval rating over last year. This approval rating came in at 22.71 percent for the first three quarters of this year, compared with 67.01 percent last year.
And to gain approval, subprime applications had to be shopped through 7.9 institutions versus 4.4 in 2007.
Meanwhile, the prime approval rating was 81.36 percent for the period, compared with 90.3 percent last year. A total of 3.2 auto lenders had to be shopped prior to approval, compared with just 1.8 last year.
For near-prime category, the approval percentage came in 77.42 percent, versus 85.56 percent. The applications had to be sent to 3.8 lenders on average, compared with 2.6 in the previous year.
"The share of applications receiving final approval for an auto loans has dropped for all three credit categories — prime, near-prime and subprime," explained Art Spinella, of CNW Research.
"Even a prime customer is having a significantly harder time getting a loan approval," he added. "And those loans that are approved have to be submitted to more financial institutions."
Breaking out the approval ratings for four states, CNW found:
Prime: 76.34 percent versus 89.46 percent
Near-Prime: 69.21 percent compared with 82.58 percent
Subprime: 20.06 percent, as opposed to 71.28 percent
Prime: 81.58, compared with 90.46 percent
Near-Prime: 77.64 percent, versus 85.39 percent
Subprime: 23.56 percent, as opposed to 74.19 percent
Prime: 79.45 percent, compared with 90.63 percent
Near-Prime: 74.28 percent from 87.57 percent
Subprime: 32.17 percent, versus 75.62 percent
Prime: 78.63 percent from 87.36 percent
Near-Prime: 71.44 percent, compared with 85.92 percent
Subprime: 19.38, as opposed to 70.81 percent
Share by Approval
Prime: 49.62 percent
Near-Prime: 49.87 percent
Subprime: 0.51 percent
Share by Application
Prime: 28.58 percent
Near-Prime: 59.24 percent
Subprime: 12.18 percent
Comparing the first quarter of this year to last, CNW also discovered:
Share of Loan Applications Eventually Approved:
Prime: 89.61 percent, compared with 92.45 percent
Near-Prime: 85.28 percent, as opposed to 87.18 percent
Subprime: 56.77 percent from 67.82 percent
Institutions Shopped before Acceptance:
Prime: 3.1, compared with 1.8
Near-Prime: 3.8, versus 2.4
Subprime: 5.6, as opposed to 4.2
Average Transaction Price:
1Q 2008: $25,983
1Q 2007: $26,174