Experian Automotive's quarterly analysis of the automotive credit industry shows that the share of new vehicle loans to credit-challenged automotive shoppers grew by 12.7% in Q3 2010, compared with Q3 2009, as lenders loosened their loan criteria, Experian Automotive announced this week.
Share of new loans to nonprime customers (those with a 620 to 679 credit score) rose from 9.79% in Q3 2009 to 10.86% in Q3 2010. For subprime customers (with credit scores from 550 to 619), share of loans increased from 5.66% to 6.61%, while share of loans to deep-subprime customers (credit scores below 550) rose from 1.46% to 1.59%.
“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,” says 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% (3.27% to 2.99% delinquencies). The 60-day delinquency rate fell 17.39% (0.93% to 0.77% 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,” says 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.