Cars Blog

Finance Blogs » Cars » Subprime car loans increasing

Subprime car loans increasing

By Tara Baukus Mello · Bankrate.com
Wednesday, July 3, 2013
Posted: 6 am ET

Car buyers with bad credit are getting increasingly bigger car loans as the economy improves.

The latest data from credit bureau TransUnion show that car buyers in the subprime credit category have seen a 6.6 percent increase in car loan balances from the first quarter of this year, compared to the same period in 2012. That increase marks an 11 percent jump of auto loan balances over the first quarter of 2011. Currently, the average auto loan balance for a consumer with subprime credit has risen $1,200 in 2013 over the same period in 2012.

Car loan balances on the whole only increased 4 percent in 2012 from the same period in 2012 and 8 percent over the last two years.

The increase in auto loan amounts should be a relief to car buyers with bad credit, but it is a bit of a concern to TransUnion analysts who noted that although delinquency rates have not increased during the last two years, there could be an economic burden on lenders if more loans become delinquent due to the increased balances.

Tara Baukus Mello writes the cars blog as well as the weekly Driving for Dollars column, providing both practical financial advice for consumers as well as insight into the latest developments in the automotive world. Follow her on Facebook here or on Twitter @SheDrives.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
7 Comments
HUBERT
July 13, 2013 at 2:56 pm

WHEN BAD CREDIT POEOPLE ARE GETTING 5 TO 7 YEAR HIGH INTEREST AUTO LOANS WITH LITTLE OR NO MONEY DOWN WITH NEGATIVE EQUITY AND CAN CHOOSE FROM SEVERAL SUBPRIME BANKS WHICH ARE NOT EVEN REQUIRING THE CUSTOMER TO PROVE INCOME OR RESIDENCY WHAT DOES THAT SAY FOR OUR BANKING SYSTEM THESE FAT CATS HAVE BUNDLES OF CASH AND WILL MAKE A HUGE PROFIT. THEY ARE PUTTING BILLIONS ON THE STREET WITH NO REGARD OF A REPAYBLE LOAN THESE NOTES WILL BE BUNDLED UP AND SOLD AS SECURTIES.DID WE NOT LEARN ANYTHING FROM THE HOUSING BUST THE AUTO FINANCE INDUSTRY IS JUST AS BAD.WHERE IS THE ALL MIGHTY CONSUMER FINANCIAL PROTECTION BUREAU THEY WILL SHOW UP AFTER THE IMPOLSION POINT FINGERS ABOUT PREDATORY LENDING AND YOU AND I WILL FOOT THE BILL

Ann
July 06, 2013 at 5:04 am

Now if only the employers stop using bad credit not to hire you when you lost your job and ended up with bad credit. Stopped using my credit 6 years ago which probably didn't help my credit either. If you don't have a job, why buy anything on credit when you can't pay ending up with bad credit anyway?

Sharon Murdock
July 05, 2013 at 10:12 pm

How about all the politicians donate a little of their salaries to a kiddie....I mean I personally think that all Gov'ts are overrun with too many Indian chiefs. Why do I have to pay my representative to fight for my rights? while they get more benefits and perks, let's not get started on their medical benefits they get better and faster care than the average taxpayer, working and or disabled.

sonny
July 05, 2013 at 6:25 pm

Alisha you are right on the mark. I was in banking for many years and this Gov is creating the "perfect storm" In the coming years what we refer to as the "new economy" is going to implode and send this country into the worse depression we have ever known .... to bad and nothing is being done. They know this however they are more interested in the next election and God forbid they step up and do something about it.

Linda
July 05, 2013 at 6:04 pm

I bought a home in Jan. 2013. Put $40,000 down and only owe a small land contract of $12,000 Including interest only have 23
small payments. My credit scores 593, 602, and 648. Only wanted a
home equity loan for $10,000 for windows. Bank of America turned me down for a home equity loan ( paid 40,000 down) because my credit score is considered poor. Have sufficient monthly income.
BOA said the government put strick rules on loans. BUT WHO GOT
BAILED OUT BY TAX PAYERS AND THE HIGHER UP STILL GOT THERE BONUSES. How do they expect the economy go forward if no one can buy anything. Transunion over rules all credit beaures. Hope someone reads this that has a solution. I was willing to use my home as collateral. Who in their right mind would put 40,000 down to loose it for 10,000 for windows. I don,t even haqve a mortgage. Hansons forget they don't care. it's all about the money. They don't even do there own financing.

Vernon
July 05, 2013 at 5:03 pm

I completely agree with Alisha, well said! Our Government is going about it all wrong, printing more money will eventually lead to the American dollar being demoted from the world standard currency and I bet you can expect to see an automatic 30% decrease in American living standards if that happens...

Alisha
July 05, 2013 at 3:54 am

If the government keeps printing money the dollar will be worth less and less. Apr will probably stay fairly low since the national government can't afford to psy high interest on the loans it owes. The economy looks like its getting better but I think this is the calm before the storm.

If you cannot afford it dont buy it. Loans are only a good deal when you can handle them correctly.