Subprime loan losses decline in prime securitizations

Fresh data from DBRS shows that subprime loans securitized with mostly prime issuance outperform subprime loans in mostly subprime securitizations, according to the rating agency’s Figures on Automotive Securitization Tapes (FAST) report published last week. An issuer’s ABS transaction is categorized as a prime or subprime shelf based on the weighted-average Fico of each securitized […]

• Bianca Chan
• July 15, 2019
• Capital Markets

More Prime Consumers Opt for Used Cars as Subprime Loses Share

As the percentage of prime and super-prime used-car buyers reached an all-time high in the first quarter, the percentage of subprime loan originations fell to a record low, according to Experian’s Q1 2019 State of the Automotive Finance Market Report published today. “The trend of more prime consumers entering the used market is one we’ve […]

• Bianca Chan
• June 6, 2019
• Archives, Credit Performance

Auto ABS Volume Closes In on $60B

Year-to-date auto securitization volume hit $57.8 billion at the end of April, with prime loan issuance accounting for the lion’s share of transactions, according to research released today by Deutsche Bank. Prime loan securitization volume totaled $23.7 billion, and subprime volume reached $12.8 billion. The remaining volume was comprised of retail lease ($9.8 billion), fleet […]

• Marcie Belles
• June 5, 2019
• Capital Markets, Credit Performance

Delinquency Rates Likely to Temper in Second-Half 2019, Experian Says

The prime and super-prime loans that account for more than 60% of all outstanding auto loans will likely spur a decline in delinquency rates later this year, said Melinda Zabritski, Experian’s senior director of automotive financial solutions. “If the loan is going to go bad, it’ll occur typically around 16 to 18 months in, so […]

• Bianca Chan
• March 5, 2019
• Capital Markets, Credit Performance, Risk Management

Fitch Forecasts Subprime Auto ABS to Weaken in 2019

While prime auto lease and loan asset-backed securitizations are projected to remain stable, Fitch Ratings Agency expects the outlook for subprime auto ABS to weaken. In a 2019 consumer lending outlook, Fitch’s Senior Director of ABS Ian Rasmussen said subprime auto asset-backed securities are more vulnerable due to weaker borrower profiles and industry headwinds inflated […]

• Bianca Chan
• January 4, 2019
• Archives, Credit Performance, Risk Management

Bigger Risk Appetites, Less Competition Spur Subprime Volume

After eight straight quarters of credit tightening, lenders are widening risk parameters to reach more subprime borrowers. The reentry into lower credit tiers stems from an increase in lenders’ use of alternative data to underwrite loans, which translates to more affordable options for subprime borrowers, said Brian Landau, senior vice president and automotive business leader […]

• Bianca Chan
• November 21, 2018
• Credit Performance, Risk Management

Prime Credit Drives Increase in Originations, TransUnion Says

Auto lenders originated 6.79 million loans through the first quarter, which marks the first year over year increase in the number of loans since some financial institutions began pulling back in 3Q16, TransUnion reported on Wednesday in a new report analyzing the strength of consumer credit 10 years after the recession.  The increase was driven by a 3% year-over-year increase […]

• Nicole Casperson
• August 22, 2018
• Credit Performance

Subprime Lenders Willing to Cut Rates to Maintain Volume, Analyst Says

Rising interest rates pose some challenges to subprime lenders, but ultimately, “If you’re willing to cut price there’s plenty of volume — and volumes are strong right now,” Moshe Orenbuch, managing director at Credit Suisse, told Auto Finance News. He explained that subprime lenders have more wiggle room to cut their return on the loan […]

• William Hoffman
• August 21, 2018
• Credit Performance