USAA Federal Saving Bank released its first prime retail issuance of 2017 last week with weighted average APR of 4.0% — the lowest of any recent USAA transaction, according to a presale report by Moody’s Investors Service.
The USAA Auto Owner Trust 2017-1 is a $486 million transaction backed by prime retail installment auto loan contracts with an average original term of 64 months and weighted average seasoning of 16 months.
The APR dropped to 4.0% in the pool, as compared to 4.05% in the 2016-1 transaction and from 6.25% in the 2010-1 transaction, according to the report.
Additionally, the percentage of borrowers with Ficos 725 and above has increased. The proportion of loans related to debtors with a Fico score greater than 725 is 66% in 2017-1 pool, up from 61% for the 2016-1 pool, according to the report.
USAA is “financially strong,” Moody’s said in the report. The bank had 15.8 million retail loans outstanding as of the six months ended June 30, up from 14.9 million the same time a year prior.
Annualized charge-offs as a percent of average outstandings reached 0.83% as of June 30, an uptick from 0.75% the year prior. However, delinquencies are declining; 30-plus day delinquencies dropped to 0.49% as of June 30, from 0.55% the year prior. And the decline may be attributable to USAA’s emphasis on education to prevent delinquencies.
“We’re very purposeful in guiding [consumers] and helping get them into the right type of loan, so we can mitigate and avoid late payments and charge-offs,” Renee Horne, vice president of consumer lending at USAA, told Auto Finance News back in May.
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