Experian: 3Q Subprime Auto Loans Climb Year-Over-Year
December 01, 2011
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SCHAUMBURG, Ill. — Experian Automotive analysis showed auto lenders are increasing loans to credit-challenged customers.
According to its quarterly automotive credit analysis unveiled today, Experian discovered 21.87 percent of all new-vehicle loans during the third quarter went to customers in the non-prime, subprime and deep subprime categories.
Experian indicated the largest percentage of increases were in the two highest-risk segments — deep subprime, which climbed 17.3 percent, and subprime, which spiked 17.8 percent.
The data revealed the non-prime loan share increased by 12.5 percent during the third quarter.
Elsewhere in Experian's quarterly review, the average consumer credit score for both new- and used-vehicle loans dropped during the third quarter.
For new-vehicle loans, the average credit score fell from 769 in third quarter of last year to 763 in the third quarter of this year. For used-vehicle loans, the average dipped from 683 to 676 year-over-year.
"The automotive finance industry is continuing a steady climb to good solid footing," surmised Melinda Zabritski, director of automotive credit for Experian Automotive.
"Consumers continue to do a better job of repaying loans, while at the same time, many of the most risky loans from 2007 and 2008 are now off the books," Zabritski continued.
"These factors combine to lower the total volume of dollars at risk and give lenders more confidence in loosening their overall lending standards," she went on to say.
Also during the third quarter, Experian found 30-day delinquencies fell 7.05 percent, ticking down from 2.99 percent in the third quarter of last year to 2.78 percent.
Meanwhile, analysts determined the third quarter's 60-day delinquencies fell 7.4 percent year-over-year from 0.77 percent to 0.71 percent.
Experian added the total volume of dollars at risk also fell by $2.99 billion year-over-year.
In other findings:
—Repossession rates dropped by 6.4 percent from 0.67 percent to 0.62 percent.
—The average loan amount for new vehicles was up $600, going from $25,273 to $25,873.
—The average loan amount for used vehicles jumped $653 from $16,706 to $17,359.
"Overall, our Q3 analysis shows very positive signs for the automotive lending industry," stated Scott Waldron, president of Experian Automotive.
"With more loans being booked outside of prime, lenders are showing they are willing to be more flexible in their lending strategies," Waldron continued.
"However, consumers may still have the impression that lending is extremely tight, so it is important for lenders and retailers to educate car shoppers that there are financing options available to a wider group of consumers," he stressed.
Experian's quarterly credit trend analysis features market reporting data and analysis from Experian's AutoCount Risk Report, which analyzes automotive lending markets based on a uniform measurement of credit quality that segments markets by geography, credit score and vehicle registrations, among other factors.
The quarterly reports also incorporates data from the Experian-Oliver Wyman Market Intelligence Reports, which provide topical, quarterly analysis; peer benchmarking options and commentary on key issues facing the financial services industry.
For more information on Experian AutoCount Risk Report, visit https://www.autocount.com.
To subscribe to the Experian-Oliver Wyman Market Intelligence Reports, go to http://www.marketintelligencereports.com.
VantageScore, a tri-bureau credit score, was used to provide average risk scores for the population segments.
Editor's Note: Check Tuesday's edition of SubPrime Auto News Update for more details from Experian on third-quarter trends, including top lenders by volume and more.
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