Portfolio balances reached a record level in the second quarter, with an increasing concentration of prime loans and leases, Experian’s latest State of the Automotive Finance Market report shows.
Total open automotive loan balances reached $1.1 trillion in 2Q17, up 7.1% from the same time a year prior. Like last quarter, credit unions have seen the highest growth among all of the financial institutions — jumping to $295 billion in the second quarter, compared with $258 billion in 2Q16.
Additionally, credit scores increased across all transaction types, according to the report. The average new credit score in 2Q17 was 714, compared with 710 the same time a year prior. The average used-financing credit score in the quarter was 652, a slight change from 648 the year prior, according to the report.
“A majority of loan balances remain prime or higher with high-risk segments remaining below 20%,” according to the report. Prime and super-prime comprises 37.8% and 17.3%, respectively, as compared with 37.3% and 16.3% the year prior. Meanwhile, subprime remains near-record low for the loan market, while deep-subprime hit a record low for used loans in the quarter.
Also of note, average new loan terms reached 68 months long — a 0.5 month change from the same time a year prior — while average super-prime loan terms reached 62.9 months with the largest year-over-year change of 0.9 months. Prime, nonprime, subprime, and deep-subprime loans all exceeded 69 months for the average term.
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