The first quarter of 2012 marked a period in which US lenders offered some of the easiest credit terms to car buyers in an effort to attract more borrowers they consider as safe, according to credit research company Experian Automotive, a unit of Experian Plc. Experian also found out that US lenders provided more money to people with subprime credit scores while cutting interest rates and allowing more time to repay. The credit research company also found out that the rates of late payments and repossessions by lenders went down in the first quarter of 2012.
Because the credit terms have become more relaxed, it became easier for individuals to purchase cars – a situation favourable to car dealers, makers and the economy, according to Melinda Zabritiski, director of automotive credit for Experian. It carries one big risk though, as bank could suffer from losses if their borrowers fail to keep up with their payments. Easier credit terms also helped carmakers sell more vehicles in the US by 10 percent through April, prompted by the industry’s recovery from the recession. Studies show that car loans are safer to make than mortgage and credit card loans during the recession, since borrowers usually prioritize car payments because they need vehicles when they go to work or apply for employment.