It hasn’t been this easy to get a car loan in years.
Why is this important: It comes amid a demand bonanza that began at the start of the pandemic – when traveling by car became the most attractive mode of transport.
Auto Loan Approval Scores are at their highest since 2015, according to Cox Automotive.
- What is happening: Auto loans are getting cheaper and longer, two factors that drive down monthly payments — something “most consumers are focusing on, more than anything else,” says Cox Automotive economist Jonathan Smoke.
- “Consumers have consistently seen better rates every month this year than they did a year ago — that’s really helped offset some of the vehicle price inflation,” Smoke said.
The big picture: The net percentage of banks making loans harder to get is at the lowest level since 2012 – a sign that lenders are keeping borrowing terms soft, if not easing them.
- That’s a sharp reversal from a year ago, when it looked like the economy was on the brink.
- Meanwhile, the net share of banks reporting stronger demand for auto loans hit a new pandemic-era high (also the highest in nine years).
But, but, but: “Banks don’t just lend to anyone,” says Jesse Rosenthal, an analyst at CreditSights.
- About a third of auto loans are for people with credit scores above 760, which is above the previous trend, Rosenthal says.
