BANDON, OR — Auto loan approvals improved in July for the prime and near prime markets, but shoppers in the subprime market continued their struggle to get approvals by conventional means, according to CNW Research.
The Bandon, Ore.-based research firm’s preliminary data for July shows that 89.5 percent of prime customers are receiving new-car loans, an increase of 12 points from October 2008.
About 82 percent of near-prime shoppers are receiving approvals, up from 73.7 percent in October 2008, the lowest point for this segment last year.
As for subprime customers, fewer than one-in-five shoppers are getting approved. CNW found that 19.88 percent of subprime customers are receiving approvals, up five points from October, but still off from the 58.2 percent approval rate in January 2008.
“It may be years, if ever, that the subprime market returns to its heyday,” said CNW’s Art Spinella. “Increased federal oversight and stricter internal rules have made conventional financing sources gun shy about those with poor or near-poor credit scores.”
He added that the growing percentage of repossessions is also hurting the subprime market. “Historically, the voluntary and involuntary repossession rate was 2 to 2.5 percent,” Spinella wrote. “That has jumped to nearly 3.8 percent this year with delinquencies also rising dramatically.”