Just way back in 2011 the subprime lending was simply a matter ignorance, the borrowers and lenders moved back. However, with the advent of 2012 most of the lenders and borrower have started to fall for subprime lending.
The average term of the new vehicle rose to 65 months in Q4 2012 compared to 62 months in Q4 2011. Longer terms and the low interest rates allow small monthly payments to consumers, helping them to choose more expensive vehicle than they may have been able to buy with a short-term loan.
However, the terms and the length has increased the average cheap car loan amount slightly, while the used car loans stayed flat at 60 months, interest rates had declined slightly, even the average monthly payments shown a drastic fall.
Yet, another study shows that middle- class Americans often have trouble to afford a new car. Therefore, the lengthier loans and increase in sub-prime financing give us a clue as to the way things are going. Well, approving the loans helped consumers a lot by making their monthly payments more manageable. Consumers today are able to afford a car more easily, while the finance company can collect interest for a longer period. So, auto-financing needs are no longer challenging when you have bad credit scores.