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More Subprime Customers Get Financing in Q1, Reports Experian Automotive

Experian Automotive’s quarterly analysis of the auto finance marketplace showed that lenders are warming up to the below-prime segment, with shares of loans to credit-challenged vehicle shoppers increasing by 11.1 percent in the first quarter of 2010.

by Staff
May 31, 2011
2 min to read


SCHAUMBURG, Ill.  — Experian Automotive’s quarterly analysis of the auto finance marketplace showed that lenders are warming up to the below-prime segment, with shares of loans to credit-challenged vehicle shoppers increasing by 11.1 percent in the first quarter of 2010.

Share of loans to nonprime customers rose from 9.81 percent to 10.57 percent during the quarter. For subprime customers, share of loans jumped from 5.68 percent to 6.16 percent, while share of loans to deep-subprime customers rose from 1.38 percent to 2.00 percent.

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The quarterly analysis also showed that it was easier to obtain a new-vehicle loan in the first quarter. The average credit score for a new-vehicle loan stood at 766, compared with 776 in the year-ago period. This quarter’s score of 766 marks the lowest average score for a new-vehicle loan since the fourth quarter of 2008.

“As the automotive credit market continues to stabilize, lenders are showing a higher tolerance for risk,” said Melinda Zabritski, Experian’s director of automotive credit. “Thirty-day delinquencies are at their lowest point since [the fourth quarter of 2008], giving lenders a little more leeway in their loan decisions. Additionally, with lower average scores for new-vehicle loans and more loan activity for credit-challenged customers, it is easier to find a loan now than at any time in the past 30 months.”

Additional findings showed that the dollar amount of automotive loans that were 30 or 60 days delinquent dropped from nearly $20 billion in the first quarter of 2010 to $16 billion a year later. Specifically, the report shows that 30-day delinquencies dropped by 7.95 percent over the previous year to 2.52 percent, while 60-day delinquencies dropped by nearly 13.45 percent to 0.68 percent.

In other findings:

  • The average credit score for used-vehicle customers was 663, down two points from 665 in the year-ago quarter.

  • The average loan amount for a new vehicle was up $8, increasing from $25,396 in the year-ago quarter to $25,404.

  • The average loan amount for a used vehicle jumped $397, increasing from $16,239 to $16,636 in the first quarter of this year.

  • The average loan term has increased by a full month, jumping to 63 months for new vehicles and 58 months for used.

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