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Subprime Loans Accounted for Nearly 22% of 2015 Originations, Equifax Reports

Subprime auto loans accounted for 21.7% of all 2015 originations. The firm notes, however, that credit performance remains excellent, a sign that finance sources 'are prudently extending credit to well-underwritten borrowers.'

by Staff
March 22, 2016
2 min to read


ATLANTA — From January through November 2015, 21.7% of all auto loans originations were issued to subprime customers according to the February 2016 Equifax Inc. National Consumer Credit Trends Report.

This meant that in that time period 5.8 million auto loans — an 11.2% increase over 2014 — originated from customers with an Equifax Risk Score below 620. The subprime loans have a corresponding balance of $104.2 billion, a 14.5% increase over the same time last year, according to the company.

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The report also found that subprime customers have consistently accounted for 21% to 22% of new auto loans for the past four years.

“Considerable attention is being given to the subprime segment with some analysts mentioning concern that it is growing disproportionately faster than originations to other segments of the credit spectrum, although the proportional mix has remained relatively static since 2012,” said Amy Crews Cutts, chief economist at Equifax. “Credit performance is still excellent, showing that lenders are prudently extending credit to well-underwritten borrowers.”

The report also cited that delinquency and write-off rates had remained stable relative to years prior but pointed to a customer shift to finance companies, as finance companies are growing originations quicker than banks. Finance companies accounted for 53.7% of all new auto accounts from January through November, 2015, according to the report.

Total loans, according to the report, for the January through November 2015 time frame came in at 26.8 million auto loans, a 9.4% increase year-over year. The loans amounted to $554.8 billion, a 12.4% increase over the year prior, the highest levels on record for the period. 


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