DETROIT — For car buyers seeking auto loans, happy days are here again.
U.S. banks and auto finance companies are once again welcoming all kinds of customers, even those with less-than-stellar credit. The average credit scores of new and used car buyers, which spiked during the economic downturn, have fallen to nearly the same level as 2008.
Better yet, experts don’t think the credit pipeline will dry up anytime soon. Low interest rates are making it cheaper for banks to get money, which makes them more willing to lend. The federal funds rate — the rate at which banks lend money to each other — is now near zero percent, down from 2 percent in the summer of 2008. Loans to subprime buyers — or buyers with credit scores of 679 or lower — are particularly attractive, since banks can charge higher interest rates. The average interest rate for a deep subprime loan — a loan to someone with a credit score below 550 — on a new car is 12.9 percent, compared with 3.2 percent for buyers with the highest scores, according to Experian Automotive, which tracks automotive credit data.
