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Subprime Lending Slows in 2006

August 14, 2006

Subprime lenders’ loan volume rose last year, the National Automotive Finance Association reported in its 2006 Nonprime Automotive Financing Survey. Delinquencies, vehicle repossessions and losses dropped in 2005, the survey says.

As reported by Automotive News, the 23 subprime lenders that responded to the association survey said their loan volumes increased in 2004 and 2005. The percentage of their accounts that were delinquent for 30 days dropped to an average of 6.8 percent last year from 7.6 percent in 2004.

Repossessions per lender averaged 1,695 a month last year, compared with 1,796 in 2004, according to the survey. The average loss per repossession was $5,997 in 2005, down from $6,007 in the previous year. In 2004, subprime lenders reported their lowest repossession losses in five years.

This year, subprime customers are finding it harder to qualify for a loan, according to Bill Jensen, national subprime executive at Chase Custom Finance. Higher interest rates and gasoline prices may be to blame.

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