By Automotive News – JOHN HUETTER
Most bankers said they hadn’t changed their practices. But a few lenders reported easing maturity maximums and lowering minimum down payments.
A moderately larger share of banks surveyed this summer said they eased standards for auto loans
in the second quarter, according to Federal Reserve data.
The Fed survey of senior loan officers asked the bankers to report behavioral changes in the prior
three months — essentially, to compare the second quarter of 2021 with the first.
According to the Fed, 11 of the 59 banks responding, or 18.6 percent, felt standards had eased
somewhat.
Most bankers said they hadn’t changed their practices. But a few lenders reported easing maturity
maximums and lowering minimum down payments. Seven banks described accepting worse credit
scores, though another bank reported increasing its minimum. Five banks said they narrowed the
spread of interest rates offered to customers, indicating looser credit as well, while three others
said they increased this range.
Consumers demonstrated a higher demand for auto loans during the second quarter, based on the
loan officers’ perspective. Out of 59 loan officers responding to the question, 21 felt demand had
grown moderately or substantially in the past three months. Five bankers felt demand had
weakened moderately. The remainder saw no change.
The Fed also asked banks to compare their past three months of lending to their bank’s historical
behavior since 2005.
The majority of the 57 respondents described their treatment of prime borrowers as consistent with
the “midpoint” of the past 16 years.
Ten lenders said their businesses had tightened standards somewhat for prime customers, but 12
others reported being somewhat or significantly looser than the historical norm.
But banks showed less of an appetite for subprime risk, based on the senior loan officers’
perspective. The Fed said 21 of the 45 lenders who responded to the subprime survey question felt
they were at the historical middle of the road.
But another 21 banks were harder on subprime lenders, with 11 lenders seen as either significantly
stricter in their underwriting or near the tightest point of the past 16 years.
