Despite an increase in subprime loan volume in the third quarter, auto loans to consumers with the riskiest credit histories hit their lowest overall share of the market in 11 years, according to Experian.
Subprime and deep subprime originations accounted for 21.19 percent of the total auto loan origination market, down 1.5 percent from the year earlier, Experian said in its latest “State of the Automotive Finance Market” report, released Thursday. Experian defines subprime borrowers as those with credit scores between 501 and 600. Deep subprime borrowers have scores between 300 and 500.
While subprime share shrunk, the Federal Reserve Bank of New York and TransUnion said in separate reports this month that subprime origination volume increased about 10 percent in the quarter.
But volume has grown across all credit tiers, Melinda Zabritski, Experian’s senior director of automotive financial solutions, told Automotive News.
“When you look at the entire population, it paints a little bit of a different picture in saying there’s some growth, but there’s greater growth elsewhere,” Zabritski said. “We’ve got a really good balance of across the risk tiers.”
An uptick in prime lending helped drive subprime share down, especially in the used-vehicle market. Subprime originations made up 22.86 percent of the used-vehicle market, the lowest level on record, according to Experian.
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