Total outstanding auto loans reached a record high of $905 billion at the end of the first quarter, an increase of 11.3% from last year, while delinquencies were essentially flat, according to Experian Automotive.
The latest figures refute the notion that subprime auto loan growth is overheating, said Melinda Zabritski, senior director of automotive finance for Experian Automotive, Schaumburg, Ill.
Last month Sen. Elizabeth Warren (D-Mass.) equated auto loans with “the pre-crisis housing market,” a bursting bubble that helped bring about the Great Recession. She called auto loans “the most troubled consumer financial product out there,” and called for what amounts to a ban on dealer reserve, or dealer markup on auto loans.
However, the latest statistics from Experian Automotive showed subprime share of the overall auto loan market was actually down a bit, to the lowest level in three years.
Experian breaks subprime into three smaller categories: Nonprime, defined as credit scores from 660 to 601, using the VantageScore 3.0 scale; Subprime, 600 to 501; Deep Subprime, 500 and below.
In the first quarter, the Deep Subprime sub-category accounted for 3.52% of outstanding auto loans, down from 3.64% a year ago. The Subprime sub-category accounted for 16.2%, down from 16.32% Nonprime increased very slightly, to 18.16%, from 18.05%, Experian said. All told, the entire Subprime category accounted for 37.88% of outstanding auto loans, down from 38.01%.
At the same time, delinquent accounts as a percent of total accounts decreased slightly. For 30-day delinquencies, the first-quarter rate was 2.13%, from 2.22% a year ago. The 60-day delinquency rate was 0.6%, down from 0.62%.
As a percentage of loan balances, delinquencies increased a few basis points, to 1.93% for 30-day delinquencies, from 1.89% a year ago. Sixty-day delinquencies were 0.5%, up from 0.48%, Experian said.
“While it’s true that the volume of subprime loans is up, the same can be said for the rest of the risk categories,” Zabritski said in a written statement. “It’s important to keep in mind that, while we should continue to watch them, the percentage of subprime loans make up a small portion of the market.”
