More automobile buyers are being denied loans. The Federal Reserve reported 14.2% of car loan rejections in June. In 2013, the Fed started keeping track of this info. Inflation, loan failures, and late payments are making lenders more selective. Customer data suggests that automobile shopping in the U.S. is more challenging than it could be, even though there are more new cars, trucks, and SUVs than a few years ago. The thief struggles with bills. The Federal Reserve monitors loan rejections. New Fed data reveals 21.8 percent of loan applicants are rejected. It could be worse. Car loan rates rose from 9.1% to 14.2% in February–June. Since 2013, car loan rejections have increased by 5%. All loans have struggled this year. Other loans were rejected at a higher rate: 21.5% of credit card applications, 30.7% of requests to increase credit card limits, 13.2% of mortgage applications, and 20.8% of mortgage refinance requests. The highest rate of credit rejection in five years was 22% in June. The Fed reported higher rejection rates across all ages, but those with credit scores below 680 were most rejected. Due to the larger economy, inflation, and rising interest rates, clients have more debt and are often rejected. Lenders should worry that borrowers won’t pay back their debts. Cox Automotive analysts reported that “auto loan performance started to worsen again in May as both delinquencies and defaults went up for the first time in three months.” The worst crime rate in over 20 years According to Cox, the significant delinquency rate for auto loans was 1.7% in May, while the subprime rate was 6.5%. The default rate was almost back to its 2019 peak. Things may only improve for a while. According to the Fed’s latest data, 31% of loan applications will be denied in the coming year. In October 2014, predicted rejection hit 28%. Over the coming year, the Fed expects to reject most credit card applications (32.8%), requests to raise credit limits (42.4%), mortgage applications (46.1%), and mortgage transfer applications (29.6%).
