Subprime financing levels off, new-car leases up
The percentage of new vehicle loans to subprime and deep subprime borrowers those with a credit score below 620 began to level off in the second quarter, according to Experian Automotive. The figure dropped from 22 percent in second quarter 2013 to 15 percent in Q2 2014. Although thatês above the 10 percent low at the peak of the recession in 2009, the figure is still well below the prerecession high of 20 percent in 2007.
Although weêve seen relative stability in the automotive industry the past several years, lenders are still showing cautionary signs when lending to the subprime market and keeping their risk at manageable levels, said Melinda Zabritski, senior director of automotive finance for Experian.
The average loan amount extended to subprime and deep subprime customers also fell in the second quarter. For new-vehicle buyers, the amount dropped from $27,563 in 2013 to $27,347 for subprime, and from $25,486 to $24,836 for deep subprime.
The Experian report on automotive finance also found that leasing hit a record 25.6 percent in Q2 2014, up from 23.4 percent last year. The interest rate for a new vehicle rose slightly, from 4.46 percent last year to 4.59 percent in 2014. And the average credit score is up slightly, at 711 for a new vehicle loan and 717 for a new vehicle lease. All figures are for the second quarter.
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