Lenders loosen credit as share of nonprime auto loans grew in Q3,
according to Experian Automotive
Other findings show 30-day and 60-day loan delinquencies drop, and loans at risk of default are down by $6.4 billion
Schaumburg, Ill., Dec. 07, 2010 — Experian Automotive today announced findings from its quarterly analysis of the automotive credit industry. The report shows that the share of new vehicle loans to credit-challenged automotive shoppers grew by 12.7 percent in Q3 2010, compared with Q3 2009, as lenders loosened their loan criteria.
Share of new loans to nonprime customers (those with a 620 to 679 credit score) rose from 9.79 percent in Q3 2009 to 10.86 percent in Q3 2010. For subprime customers (with credit scores from 550 to 619), share of loans increased from 5.66 percent to 6.61 percent, while share of loans to deep-subprime customers (credit scores below 550) rose from 1.46 percent to 1.59 percent.
“Easier access to loans is a positive sign for the auto industry, as tighter loan criteria during the economic downturn represented a significant challenge for automotive manufacturers and their retail networks,” said Scott Waldron, president of Experian Automotive. “Making it easier for consumers to obtain credit can only help the auto industry moving forward.”
Consumers also are doing a better job of repaying loans, as 30-day and 60-day delinquencies both dropped in Q3 2010, compared with Q3 2009. The 30-day delinquency fell 8.43 percent (3.27 percent to 2.99 percent delinquencies). The 60-day delinquency rate fell 17.39 percent (0.93 percent to 0.77 percent delinquencies).
Findings from the Q3 report also showed that the total dollar volume of loans at risk of default dropped by $6.4 billion.
“Overall, our Q3 analysis shows that there are very positive signs for the automotive lending industry,” said Melinda Zabritski, director of automotive credit for Experian. “With delinquencies down and less money in their portfolios at risk, lenders can be a little less conservative in their lending strategies. Consumers still have the impression that lending is extremely tight, so it will be important for lenders and automotive retailers to educate car shoppers that there are more loans available to a wider group of consumers.”
Other findings from the Q3 analysis include:
• The average credit score for a new vehicle customer in Q3 2010 fell by six points to 769 from 775 in Q3 2009
• The average credit score for used vehicle customers in Q3 2010 was 683, down just one point from Q3 2009
• The average loan amount for a new vehicle jumped to $25,273 in Q3 2010 from $22,743 in Q3 2009
• The average loan amount for a used vehicle jumped to $16,706 in Q3 2010 from $15,729 in Q3 2009
Experian Automotive’s quarterly credit trend analysis features market reporting data and analysis from Experian Automotive’s AutoCount® Risk Report, which analyzes automotive lending markets based on a uniform measurement of credit quality that segments markets by geography, credit score and vehicle registrations, among other factors. For more information on Experian Automotive’s AutoCount Risk Report, visit https://www.autocount.com. It also incorporates data from the Experian–Oliver Wyman Market Intelligence Reports, which provide topical, quarterly analysis; peer benchmarking options; and commentary on key issues facing the financial services industry. To subscribe to the Experian–Oliver Wyman Market Intelligence Reports, go to http://www.marketintelligencereports.com. VantageScore®, a tri-bureau credit score, was used to provide average risk scores for the population segments.
Experian Public Relations
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About Experian Automotive
Experian Automotive, a part of Experian, delivers information services to manufacturers, dealers, finance and insurance companies, and consumers. Experian® helps automotive clients increase customer loyalty, target and win new business, and make better lending and vehicle purchase decisions. Its North American Vehicle DatabaseSM, housing more than 650 million vehicles, along with Experian’s credit, consumer and business information assets, meets the industry’s growing demand for an integrated information source. Experian’s advanced decision support services help clients turn this information into improved business results. Experian technology supports top automotive businesses, including eBay Motors, O’Reilly Auto Parts, Affinia, CarMax and NADAguides.com. For more information on Experian Automotive and its suite of services, visit our Website at http://www.experianautomotive.com.
Experian is the leading global information services company, providing data and analytical tools to clients in more than 90 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2010, was $3.9 billion. Experian employs approximately 15,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; Costa Mesa, California; and São Paulo, Brazil.
For more information, visit http://www.experianplc.com.