Safe Bet: Prime-Credit Customers Get Growing Share of Loans
A growing percentage of new-car sales are going to prime-credit customers as banks and other financial institutions look for safer bets, according to CNW Market Research.
A growing percentage of new-car sales are going to prime-credit customers as banks and other financial institutions look for safer bets, according to CNW Market Research.
In the preliminary November data, 85.7 percent of those who purchased a car had prime credit — the highest rate since December 2008. And while near-prime held within a narrow band between 10 and 12 percent of buyers, the subprime shopper’s chance of getting a loan shrunk dramatically.
In July of 2006, roughly 16 percent of all new-car sales went to customers who had subprime credit scores. In November of this year, the figure stood at about 3 percent after hitting a 2009 high of 8.4 percent in April.
Financial institutions are trying to scrub their books of anything or anyone who could constitute a bad risk,” wrote the Bandon, Ore.-based market research firm. “And part of the decline can be traced to consumer sentiment and business psyche.
“There is a definite and profitable market for subprime paper,” CNW added. “Just don’t expect major banks to pay it much heed any time soon. They have their own problems.”
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