AmeriCredit’s subprime ABS deals “have weathered better than its subprime peers” — including the lender’s most recent securitization — thanks to its “prudent” underwriting process, according to a presale report by Moody’s Investors Service.
The AmeriCredit Automobile Receivables Trust 2017-3 is a $1.3 billion transaction backed subprime retail installment auto loans. The weighted Fico score is 577, which has ticked up two points from AmeriCredit’s previous securitization.
“The credit quality of the collateral in the 2017-3 pool is consistent with recent securitized pools and reflects AmeriCredit’s prudent post-recession underwriting practices,” Moody’s said in the report. “The similarity to early pools increases the reliability of past deal performance data as a guide to future performance.”
Despite the industry-wide trend of extending loan terms, AmeriCredit’s origination terms remain steady, not exceeding 75 months. Loans in the pool have an average origination term of 71 months with a weighted average APR of 12.65%, according to the report.
AmeriCredit’s loan terms are not likely to be extended, Nicky Dang, vice president and senior credit officer at Moody’s Investors Service, told Auto Finance News. “AmeriCredit might want to extend the loan terms in their management book, but not for their securitizations,” she said. “The securitization process has certain eligibility criteria, so they can’t securitize the assets if the loan terms are too long.”
Additionally, APR and Fico scores will remain consistent, according to Dang. “A 12.65% APR is pretty high, but it is certainly not the highest in the subprime sector,” she said. “I have seen some lenders offering a 19% to 20% APR before.”
Also of note, delinquencies comprised 5.1% of AmeriCredit’s retail loan portfolio at the first six months ended June 30, compared with 6.8% the same time a year prior.
“The decreasing delinquency is due to higher prime loan percentage in the managed portfolio,” Dang said. “If prime percentage keeps rising, we may see the overall delinquency continue to come down.”
