The auto finance industry, as a whole, is being “disciplined and very careful,” particularly in subprime, despite the market’s view that lenders “are back to the go-go days that we’ve seen in the past,” Andrew Stuart, TD Auto Finance’s president and chief executive said. “Subprime is not something that we participate in at TD, but my feeling is that most responsible lenders that I talk to are managing their business in a responsible way and are leveraging as many analytical tools as possible to make good credit decisions and maintain their position in the market,” he told AFN.
In fact, auto lenders made more than five times as many loans to super-prime customers than to deep subprime customers in the second quarter — 17.9% compared with 3.5%, according to Experian Automotive’s 2Q State of the Automotive Finance report released Tuesday.
“Automotive lenders seem to be keeping cool heads when it comes to how much risk they are willing to take with subprime and deep-subprime customers,” Melinda Zabritski, senior director of automotive finance for Experian, said in a press release. “Yes, subprime and deep subprime loans are growing, but the entire market is growing from a volume perspective across all risk tiers. In fact, the subprime loans have actually dropped as a percentage of the total market. That, combined with only a slight uptick in delinquencies, makes clear that the sky is not falling.”
