DES MOINES - Car loans are becoming easier to obtain.
"A couple of months ago, it was horrible," said George Magliano, an automotive research analyst with IHS Global Insight. "The least blemish on your credit report and you got nothing."
The loan approval rate for customers with the highest credit scores was 90 percent in June after sliding to 70 percent in late 2008 during the recession.
It's this group that's taking advantage of the widely advertised zero-percent financing deals.
For the majority of consumers with middle-tier credit, in the range of 620 to 750, loan approvals jumped 12 percentage points in the past year to above 82 percent, according to CNW Marketing Research of Brandon, Ore. Many banks are eager to make deals.
And now, even those with poor credit scores are getting a break.
Historically, the approval rate for subprime borrowers - those with scores below 620 - ran about 60 percent.
Last year, the rate fell to 5 percent. Now, it's 9 percent.
Subprime borrowers still must make sizable down payments and will pay interest of 10 percent or more.
About 17 percent of all the auto loans written for new-car buyers in the first quarter were to customers with below-prime credit.
This group obtained 53 percent of the loans for used cars, according to the credit-reporting agency Experian.
It helps that interest rates are falling. And, in another sign of a reawakening car credit market, lenders are expanding.
One of the largest subprime auto lenders, AmeriCredit Corp., expanded the number of auto dealers it works with to more than 8,000 in the first quarter of this year from 4,500 a year ago.
"That's a sign that they're willing to tick up their lending; they're feeling a lot better about the trends," says Meghan Neenan, an analyst for Fitch Ratings.
Some lenders want customers to make larger down payments or bring in a more valuable trade-in to increase chances of loan repayment, said Keith Leggett, a senior economist at the American Bankers Association.
Others, including local and regional banks looking for new sources of revenue after losing money on commercial real estate loans, have relaxed car-loan terms.