Relaxed credit criteria are giving more Americans a chance to buy a car, but many consumer advocates are worried about some lenders' methods. Some lenders are reaching beyond the traditional credit bureaus to alternative data sources, including some that check a borrower’s utility payments and rental history. GM Financial, for example, signed up for LexisNexis’s RiskView, a credit score based on such nontraditional data. Pulling a wider set of consumer data sometimes allows GM Financial to lower the interest rate charged on a loan by as much as two percentage points. Consumer groups, however, argue that people with limited credit histories may be low-wage workers who have trouble keeping up with their bills and that reporting information like rental history could impair their already shaky credit. "We want to see more lending, but not at the expense of consumers," said John Van Alst of the National Consumer Law Center. Subprime loans are the smallest but fastest-growing segment of the auto market, making up 35.4 percent of the $726 billion in outstanding car loans in the first three months of this year. Some auto dealers are extending the repayment periods for some subprime loans; but in some cases, the length of the loan could exceed the useful life of the car. To offset the risks associated with borrowers with poor or limited credit, some subprime lenders charge annual interest rates above 10 percent.
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