First Quarter auto sales buoyed by expanding loan policies

The incidence of loans to nonprime customers rose from 9.81 percent in 2010 to 10.57 percent so far this year. For subprime customers, the number of loans jumped from 5.68 to 6.16 percent, while loans to deep-subprime customers grew from 1.38 to 2.00 percent.

The fact cars are selling at close to pre-recession rates is a sign the economy is strengthening – credit companies extending credit to higher risk customers is another.

The report also found it was easier to get a new vehicle loan this year. The average credit score for a new vehicle loan this year is 766, compared with 776 last year. This 766 credit rating marks the lowest average score for a new vehicle loan since the last quarter of 2008 when it was the same.

"As the automotive credit market continues to stabilize, lenders are showing a higher tolerance for risk," said Melinda Zabritski, Experian's director of automotive credit. "Thirty-day delinquencies are at their lowest point since Q4 2008, giving lenders a little more leeway in their loan decisions. Additionally, with lower average scores for new vehicle loans and more loan activity for credit-challenged customers, it is easier to find a loan now than at any time in the past 30 months."

The amount of automotive loans 30 to 60-days delinquent has decreased from almost $20 billion during the first quarter last year to $16 billion in 2011. Specifically, the 2011 report shows 30-day delinquencies dropped by 7.95 percent over the previous year, down to 2.52 percent, while 60-day delinquencies dropped nearly 13.45 percent to a barely significant 0.68 percent.

Other highlights included:

• The average credit score for used vehicle buyers this year is 663, down two points from 665 last year.

• The average loan amount for a new vehicle was up $8, from $25,396 to $25,404 in 2011.

• The average loan for a used vehicle increased $397, from $16,239 to $16,636, in a subtle indication of the heightened value of used cars.

• The typical loan term has increased a full month, to 63 months for new vehicles and 58 months for used.

Experian Automotive's quarterly credit trend analysis features market reporting data and insights from Experian Automotive's AutoCount Risk Report, which analyzes automotive lending markets based on a uniform measurement of credit quality that segments markets by geography, credit score and vehicle registrations, among other factors.

For more information on the report, click here.