CINCINNATI—Car lease credit approvals for May were down 11.5% from the previous month, with 69.6% of car lease shoppers gaining lender approval to proceed with a lease transfer, compared with 78.6% during April, according to Swapalease.com.
Swapalease.com is a car lease marketplace, where borrowers look to get out of a lease early while others look to pick one up, generally for a short term.
The year-to-date 67.4% lease credit approval rate in 2015 has performed slightly better than same time a year ago when 65.9% of car lease shoppers were gaining approvals, explained Swapalease.com. And despite some continued volatility each month, the year-to-date approval rate has steadily climbed each month since March, when it reached a low of 63.4%.
Subprime customers continue to drive a large makeup of the lease declines each month, explained Swapalease.com, suggesting that FIs should consider relaxing credit standards for approval.
“The economy has continued to improve, unemployment continues to grow, and auto delinquencies have remained in check throughout the economic rebound. Furthermore, subprime car shoppers interested in taking over a lease would only have payment obligations typically less than 24 months, and their ability to make payments would actually help improve their credit profile,” the company stated.
“We’re hopeful that the industry will consider new ways to extend lease options to customers even with less-than-stellar credit,” said Scot Hall, EVP of Swapalease.com. “The industry has expanded risk environments to very long-term loans, and we feel the environment for risk would be muted in an environment of less than 24 months even for a subprime credit profile.”