Lenders are tightening the spigot on new auto loans, making it harder for U.S. consumers with weak credit to buy a car, data from the Federal Reserve Bank of New York show.
New car loans for subprime borrowers fell in the first quarter to $25.9 billion, the lowest in two years, according to the New York Fed's quarterly report on household debt and credit. Drivers with credit scores below 620 now comprise less than 20 percent of new loans, down from almost 30 percent a decade ago. Borrowers with the highest credit scores -- 760 or more -- made up nearly a third of new auto loan originations in the first quarter as lenders target the safer deals.
Banks including Fifth Third Bank Corp. have been trimming their loan books and cutting back on riskier credit as delinquent auto loan balances surge. The share of auto debt more than 90 days overdue rose to 3.82 percent in the first quarter, the highest in four years.