Approval rates up in subprime

Increased levels of funding into the non-prime sector have seen finance approval rates climb for brokers, recent statistics have revealed. Louis Rix, director of brokerage Carfinance247, said 26% of non-homeowner applicants were approved for car loans in April, compared to just 15% during the same period last year

Lenders having more
access to funding as confidence in economy
returns.

Increased levels of funding
into the non-prime sector have seen finance approval rates climb
for brokers, recent statistics have revealed.

Louis Rix, director of
brokerage Carfinance247, said 26% of non-homeowner applicants were
approved for car loans in April, compared to just 15% during the
same period last year. Similarly, some 38% of subprime homeowner
applicants were approved in April, up from 29% in April
2010.

Non-homeowners make up 85% of
the applicants processed by Carfinance247 each month.

Rix said the change had come
about through lenders having more access to funding in recent
months.

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“Overall, it is great news,
as this means that with car finance providers offering an increased
facility for lending to both homeowners and sub-prime applicants
alike, confidence in the economy must be returning,” Rix
added.

Meanwhile, Shamus Hodgson of
non-prime lender Duncton said approval rates had increased
significantly since his company had increased funding levels and
invested in improved decision-making software.

Duncton’s automated credit
decision system, Eclipse, currently approves between 40 and 50% of
applications instantly and rejects around 10%, passing the
remainder through to manual underwriting. Of this remainder, around
50% is then approved, meaning that of all applications to come
through Duncton’s doors, between 65 and 70% are
approved.

Hodgson said: “A lot of the low approval rates in recent
years have been down to cash constraints among lenders. We are
currently very much in growth mode, and are very confident of the
quality of our approvals.”