December 4, 2014

According to Moody’s Investors Service, underwriting standards on auto loans will slip in 2014 as increased competition pushes lenders to take more risk.

We are seeing an increase in competition for auto loans since there are more and more lenders entering the marketplace. With that comes a lower rate. The analyst from Moody’s said:

Loan terms to buyers with good credit started to relax ‘marginally’ about a year ago. Sub-prime lenders have been loosening their standards back toward pre-crisis levels for several years, leading to an increase in delinquencies in recent months.

Auto sales are expected to exceed 16 million next year and reach a level not seen since 2007. Keep an eye on the competition.

Leasing, which traditionally only attracted luxury car buyers, is now accounting for a growing share of non-luxury sales as auto prices continue to rise. In 2007, leasing was slightly less than 19%. Year-to-date leases are just above 28% of the market.