Overall, average credit scores steadily have declined over the past two years. Looking at car loans made in the last quarter of 2011, the average credit score on a new-car loan was 761, and 670 on a used-car loan. The average amount financed has increased -- $26,419 for new cars and $17,404 on used-car loans -- while interest rates have dropped to an average of 4.52 percent for new-car loans and 8.68 percent for used-car loans.
Perhaps the best news for those who had recent financial troubles that affected their credit is it's getting easier for car buyers with not-so-good credit to get loans, and at better interest rates. Experian reported that car loans for nonprime buyers and lower are up 13.8 percent for new-car buyers and 8 percent for used-car buyers, as compared to the last quarter of 2010.
The amount lent to these buyers is also on the rise, averaging $1,548 more for new cars and $772 more for used cars.
While car buyers with credit problems still pay the highest car loan interest rates, these rates also have declined when compared to the last quarter of 2010. Of all the credit categories, deep-subprime buyers, those with the worst credit, have seen the biggest drop over the last year in new-car loans, averaging 12.51 percent interest, a 0.89 percent decline. New-car loan interest rates are currently at 9.55 percent for subprime, 6.34 percent for nonprime, 4.54 percent for prime and 3.29 percent for super prime.
Used-car loan interest rates have declined as well, averaging 17.78 percent for deep subprime, 14.17 percent for subprime, 9.33 percent for nonprime, 6.38 percent for prime and 4.46 percent for super prime.
While car loan interest rates are better than they have been in the recent past, it's still a great idea to do everything you can to improve your credit score before applying for your next car loan. Check out the Bankrate story "7 simple ways to improve your credit score."