Experian Automotive released its State of the Automotive Finance Market report Tuesday, which shows that more subprime car buyers were able to secure auto loans for new and used vehicles in the fourth quarter.

“Overall, Q4 2012 was a very favorable time for consumers to buy a new or used vehicle in terms of overall monthly payments,” Melinda Zabritski, director of automotive credit for Experian Automotive, says in a statement. “Lower interest rates and longer loan terms made it easier for consumers to finance a vehicle while keeping their payments affordable. This, combined with the fact that more vehicle loans went to consumers with credit outside of prime, portends a vital and healthy automotive market.”

Experian says that the average interest rate for a new vehicle loan for subprime car buyers in the fourth quarter dropped to 4.36 percent from 4.52 percent in Q4 2011. The average interest rate for a used vehicle loan also dropped for subprime borrowers. It went from 8.67 percent in the fourth quarter of 2011 to 8.48 percent in Q4 2012.

Business Week attributes these lower interest rates as one of the factors drawing buyers into dealerships after notable low sales throughout the recession, when it was more difficult to get approved for an auto loan. They also report that U.S. car sales reached 14.5 million in 2012, which is the highest point in five years.

CNBC reports, “… 43.2 percent of new car loans in the fourth quarter were written for those with subprime credit scores, according to Experian. That is the highest percentage of new car loans going to subprime buyers since late 2007.” CNBC also notes, “As the economy has slowly improved, lenders are increasingly comfortable writing auto loans for those with subprime or weak credit ratings.”

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