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Longer Auto Loans, Fewer Delinquencies

Marc Romanelli | Riser | Getty Images

A wider range of car buyers in America were able to take out loans and finance their purchase, with many buyers stretching out their payments, according to a new report from Experian Automotive.

In the third quarter of this year, the average credit score continued to drop as automakers and banks wrote more loans for those with subprime credit scores. While more people with less-than-stellar credit took out auto loans in the third quarter, the number of delinquent loans and auto repossessions fell once again.

"Based on the numbers, the auto finance market is the strongest we've seen in years," said Melinda Zabritski, Director of Automotive Credit for Experian.

The report is a snapshot of the 4.5 million auto loans written in America during the third quarter. (Read More: Sticker Shock: New Car Prices Are Going Up.)

Heftier Loans/Lower Monthly Payment

In the third quarter the average new car loan was for $25,963 (up $90 vs. last year) and the average used car loan is for $17,577 (up $218 from last year).

Despite heftier loans, the monthly payment for a new car loan was $452, down $5 a month from the same time last year. The average used car monthly payment edged higher by a dollar to $350.

Why did they fall? It's a reflection of Americans spreading out their loan payments over a longer period of time. (Read More: New Car Buyers Stretching Out Payments.)

In the third quarter there was a 27 percent jump in the number of new vehicle auto loans with terms that stretch out more than 6 years and a 4.4 percent increase in loans lasting 5-6 years.

The trend is similar when it comes to used car loans.

Delinquencies and Repos Falling

As auto dealers and banks write loans for more buyers with subprime and deep subprime credit scores, there is always the worry of more loans falling into delinquency when borrowers cannot make their payments. But as the economy improves, the auto delinquency and repossession rates have fallen. (Read More: Whoa! 1.7 Billion Cars on the Road by 2035.)

In the third quarter, just 2.67 percent of all auto loans were in 30 day delinquency where borrowers had missed payments. The rate was less than 1 percent for 60 day delinquencies. Both are down compared to a year ago.

"The delinquency rates are low because borrowers may have improved their personal finances as the economy has improved," Zabritski said.

Meanwhile, auto repossessions also fell in the third quarter by a whopping 35.4 percent according to Experian Automotive. Just 0.4 percent of all auto loans fell so far into delinquency that lenders were forced to repossess the vehicle.

—By CNBC's Phil LeBeau; Follow him on Twitter @LeBeauCarNews

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