More Banks Tailoring Car Loan Rates: Lenders Ask Borrowers Deemed Less Creditworthy to Pay Mo
A growing nuinhcr of banks arc looking a: tailoriiij; interest rates on auto loans to the creditworthiness of borrowers.</br></br>A few institutionsÛÓincMint; Seattle-First National Bank and South Carolina National HankÛÓalready offer so-called tiered pricing, under which risky borrowers pay higher rates and more creditworthy customers pay less.</br></br>The concept,not previously applied to consumer loans, is attracting ÛÏa large amount of interest" in the banking industry, said Anne Tonks, manager of dealer support at Seattle-First National, which divides customers into three tiers.</br></br>The concept also was widely discussed last week at the Consumer Bankers AssociationÛªs annual conference on auto finance.</br></br>Although banks frequently offer preferential rates on certain products to customers with large balances nr strong credit histories, they generally have viewed auto loans as a singleprice item. In segmenting the market, banks are paving the way for broader relationships with consumers who receive discounted rates.