Demand for Auto Loans Weakened in 2Q, Fed Finds | Auto Finance News

Demand for Auto Loans Weaken, Fed Finds

The Federal ReserveBanks reported that demand for auto loans weakened in the second quarter, while demand for other consumer loans remained “basically unchanged,” according to the Federal Reserve.

The findings come from 76 domestic banks and 22 U.S. branches and agencies of foreign banks surveyed by Senior Loan Officer Opinion Survey on Bank Lending Practices, whose results were released Monday. Both auto loans and credit card loans faced a weakening demand from a net fraction of banks surveyed.

Additionally, only 7.7% of banks surveyed have tightened credit standards for approving auto loans, down from 11.5% last quarter. In general, credit standards for consumer loans were on the tight end for subprime borrowers while being somewhat looser for prime borrowers.

“In particular, significant net fractions of banks reported that the levels of their standards are currently tighter than the midpoints of their respective ranges for both auto and credit card loans to subprime borrowers,” according to the survey. However, there was a moderate net percentage of banks that reported the current level of standards is easier than the midpoint, on net, for auto loans to prime borrowers. Net percentage refers to the fraction of banks that reported having tightened standards, minus the fraction of banks that reported having eased standards.

Also of note, there was a modest net share of banks that reported that the current level of standards is tighter than the midpoint for consumer loans other than credit card and auto loans. However, even for loans to prime customers, banks indicated tightening relative to last year — in all five consumer loan categories, banks reported that the current levels of standards are tighter, on net, than in the July 2016 survey.

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