Brandon, Ore. As 2008 began, dealers were already feeling the effects of the credit crunch. To add to all the predictions for new-vehicle sales to drop this year, lenders are making it harder for dealers to get those customers who do buy financed.
CNW reported that from Jan. 1 to March 20, loan applications that are eventually approved were down from a year ago. And that was the trend across all tiers, with subprime buyers being hit the hardest.
Approvals for subprime loan applications fell to 57 percent, and only 1.36 percent of all loan approvals were subprime in the first quarter of the year. For the same period last year, more than 12 percent of all loan approvals were subprime.
In addition to lower approval rates, fewer lenders are accepting applications, a trend that is causing dealers to shop multiple financial institutions when submitting an application for approval. In CNW’s research, loan applications for prime borrowers were sent to three different lenders before being accepted. Subprime applications were sent to more than five institutions to get approval.