May 30, 2012
SCHAUMBURG, Ill. — Touting an auto lending environment that’s in as good a shape since the market fallout of 2008, Experian Automotive shared the results of the auto finance market’s quarterly checkup on Tuesday, which — among many other findings — showed that used-vehicle financing has loosened up.
And the same could be said for auto lending, in general.
“During the first quarter of 2012, car shoppers definitely found more favorable conditions for their vehicle loans,” said Melinda Zabritski, director of automotive credit for Experian. “A reduction in average credit scores, lower interest rates and a lengthening of loan terms are all very good signs for the market and offer great opportunities for consumers looking to make a deal on a new or used vehicle.”
She added: “Our report shows automotive lending is as healthy as it’s been since the market bottomed out in 2008. With consumers doing a good job of paying back loans on time and the percentage of dollars at risk reaching its lowest point in six years, lenders are able to extend terms and provide lower rates. This thawing of the credit pipeline has been good for everyone, from consumers to lenders to automotive retailers.”
Sharing some trends specific to used-car loan originations in Q1, Experian pointed out that the average credit scores in used-car loans was 659, marking a 4-point year-over-year decline. Interest rates on used-vehicle loans dipped from 9.08 percent to 9.02 percent.
Furthermore, the average loan term for used financing deals was 59 months, an increase of one month. There was also a $411 uptick in the average amount financed in used-vehicle loans ($17,050).
Average monthly payments for used loans climbed $3 to $346
Experian also offered a breakdown of risk distribution for used loans. In the first quarter, subprime loans commanded 18.82 percent of used loans, compared to 17.41 percent a year ago. Super prime deals took a 30.45 percent share (down from 32.97 percent), while prime loans increased their share from 12.47 percent to 12.78 percent.
The share for nonprime loans increased from 14.35 percent to 15.92 percent, and deep subprime share fell from 22.81 percent to 22.03 percent.
As for the types of lenders in the used-car finance market, banks increased their share 8.5 percent to 36.07 percent; BHPH loan share dipped 12.8 percent to 17.56 percent; captives were off 16.4 percent at 6.21 percent; credit unions climbed 5 percent to 19.79 percent; and finance inched up 0.2 percent to 20.37 percent.
Continuing on, Experian ranked the top used lenders by market share during the first quarter and found that Wells Fargo (6.63 percent) topped the list, followed by Ally (4.16 percent) and Capital One (3.91 percent), respectively. Rounding out the top five were Chase (3.5 percent) and Santander (2.33 percent).