Auto finance sources continued to favor the less risky lending categories in June, with approval rates for the prime and nearprime categories reaching new highs. The story was different for subprime approvals, which continued their descent from a high in April, according to CNW Research.
Excluding leases, balloon notes and other non-traditional financing, approval rates for prime (750+) and nearprime (620-749) grew from 89.89 percent and 80.37 percent, respectively, in May to 90.13 percent and 82.58 percent in April. This was the highest point for approvals since 2007 for the prime segment and 2008 for the nearprime segment.
Including all forms of financing, approval rates for the prime and nearprime segments grew from 92.47 percent and 86.59 percent, respectively, in May to 92.81 percent and 86.74 percent in June.
The best month for subprime approvals occurred in April, when application approvals reached 10.28 percent – the highest point since October 2008. Since then, approval rates have fallen to 9.11 percent in May and 9.05 percent in June. Including all forms of financing, approval rates for the high-risk category fell from 14.04 percent in May to 13.26 percent in June.