Fitch Ratings found that “2015 is the weakest vintage” of securitized loans, performing even worse than loans made during the 2007 financial crisis, according to the rating agency’s Auto ABS Index report released the month.
Extended loan terms and continued used-car depreciation are the main drivers of the poor performance, which Fitch predicts will reach loss levels as high as 15%.
Santander Consumer USA is among the lenders seeing worsening performance from this vintage. Loans made in 2015 comprise 30% of overall balances at the company, yet they account for 35% of losses through the first quarter, Chief Executive Jason Kulas told Auto Finance News.
“That’s outsized losses versus balance,” Kulas said. “But it’s 30% of the balances right now, and this time next year it will be significantly lower than that. It’s being replaced by originations in 2016 and 2017.”
During the first quarter, annualized subprime net losses came in at 9.05%, up from 8.58% the same time a year prior, according to Fitch. Prime losses also rose, to 0.73% compared with 0.62% during 1Q16.
