Auto Lenders Focus on Subprime Borrowers image

A new study shows that US lenders begin to offer more new car loans to subprime borrowers, just like before the economic crisis.

From April to June subprime borrowers received about 25.41% from all loans given for the purchase of new vehicles, up 22.29% from the same period last year and over 24.96% from 2007, when the financial crisis began. Experian Plc’s auto finance research report also shows that lenders are also offering more loans to subprime borrowers of used cars. In the last quarter subprime borrowers were given 56.46% from the total number of loans given for used cars, which is an increase of 52.70% compared to last year.

Banks and other lenders try to find solutions to make up for the lost profits since the beginning of the financial crisis, five years ago. Melinda Zabritski, director of automotive credit for Experian, said that lenders are also comparing how much they lend with the value of the new cars.

“Despite the rise in subprime loans overall, there is still a strong sense of managing risk,” Zabritski said in a statement from Experian. “Because the overall lending environment has improved, lenders are making loans available to a wider range of customers.”