Experian: Subprime Originations Grow, Long-Term Loans Rise

Credit performance and financing marketshare were mostly flat through the first half of the year, according to new data from Experian Automotive.

Subprime originations are on track to reach pre-recession levels in both volume and marketshare. Subprime share financing has increased to 14% on new cars and 7% on used, while average credit scores have dropped below pre-2Q08 numbers.

“We’re not quite where we were in pre-recession levels, but the trend is beginning to shift in a much more positive direction,” said Melinda Zabritski, director of product and marketing at Experian Automotive, during a conference call last week detailing the state of the automotive finance market.

Leasing, for one, stayed pretty flat at about 23% of the market, with a slight year-to-year increase. Meanwhile, loans accounted for 38.47% of financing for new-car sales and 61.53% of financing for used-car sales.

Year over year, older vehicles accounted for a greater percentage of what was financed ― almost 46% of all vehicles financed in the first half were more than five years old.

“Obviously, we have inventory shortages, but we’re also seeing great reliance on financing,” she said.

The Top 20 lenders, which represented 51.76% of all financing marketshare, were topped by Ally, Wells Fargo, Toyota Financial, Chase Auto, and Capital One Auto. Specifically, Ally led new-car financiers with 11.59%, while Wells Fargo topped the used category at 6.99%.

“There were a lot of shifts, but very slight marketshare gain ― only 0.3%,” she said. “But there was a volume increase of more than 11%” on used-car financing, she added.

Another interesting note was that long-term loans are on the rise, shifting to an average of 64 months, up from 63 months, a number that’s been consistent the past few years. Used-car loans averaged 60 months, from 59 months previously.

Loan terms in the 61-to-72-month category accounted for 43.06% of new-vehicle financing; terms in the 49-to-60-month bracket totaled 29.27%. Used loans followed a similar pattern, with 36.33% booked between 61 and 72 months, followed by 29.48% with 49-to-60-month terms.