F&I and Showroom, January 2016
www fi magazine com 18 F I and Showroom January 2016 AUTO FINANCE tions for controlling monthly payments is extending the life of the loan In the third quarter new and used vehicle loans between 61 and 72 months reached all time highs of 44 and 41 respectively Furthermore the percentage of consumers extending their new vehicle loan term between 73 and 84 months increased 171 from the year ago period to 275 Used vehicle loans are also trending toward longer term lengths with loan terms between 73 and 84 months increasing 12 from a year ago to an all time high of 162 CREDIT SCORES DIP Credit scores often dictate a customers creditworthiness as well as the interest the borrower can secure In the third quarter the average credit score for a new vehicle loan fell three points from a the year ago period to 710 This was good news for dealers as they were able to capture more potential buyers As for used the average score remained unchanged from the third quarter 2014 at 650 Looking at loan volumes the superprime category led the way with an 83 increase from a year ago Subprime and nonprime followed closely behind with increases of 78 and 77 respectively And with the distribution of open loans by risk segment remaining relatively unchanged from a year ago the surge in outstanding balances was the result of growth in all credit tiers THE BOTTOM LINE Its clear that high transaction prices arent pushing consumers to the sidelines Instead they are turning toward a more than willing auto finance market that continues to come up with creative ways to keep payments affordable and the metal moving The growth in leasing longer loan terms and the drop in credit scores are definitely opening up the market to buyers who might not otherwise have been able to afford a vehicle purchase While these trends are great for moving vehicles off dealer lots it is critical industry professionals keep an eye on the trends and shifts in the market to ensure that the automotive finance industry remains strong and healthy ABOUT THE AUTHOR Melinda Zabritski serves as senior director of automotive credit for Experian Automotive E mail her at melinda zabritski@ bobit com 0 100 200 300 400 500 470 482 358 361 12 New Deep Subprime Subprime Nonprime Prime Superprime Superprime Used Average Monthly Payment Average New Amount Financed Q3 2014 Q3 2015 Q1 2014 Q1 2015 Q3 2014 Q3 2015 400 420 440 460 480 500 520 445 457 472 485 490 503 498 510 495 508 Deep Subprime Subprime Nonprime Prime Average Used Amount Financed Q3 2014 Q1 2015 300 320 340 360 380 400 a 3 a Q4 2012 Q4 2013 Q4 2014 Balances By Lender Type Outstanding Auto Loan Balances B Outstanding Auto Loan Balances B 0 200 400 600 800 1000 Finance Credit Union Captive Auto All banks 257 284 222 178 116 211 157 96 135 313 230 208 Bank Captive Credit Union Finance Other YOY Change Loan Balance Billions 0 5 10 15 20 25 30 35 31 25 24 9 Q1 2014 Q1 2015 Average Monthly Payment 0 100 200 300 400 500 412 405 13 24 25 36 37 48 49 60 Term Distribution 0 10 20 30 40 50 60 70 80 901 2537 079 6470 Q4 2012 Q4 2013 Q4 2014 Total Open Balances 0 200 400 600 800 1000 800 886 721 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 New Lease Share of New Financing 0 5 10 15 20 25 30 1768 2362 2440 2764 2379 New Used Q1 2012 Q1 2013 Average Term 0 10 20 30 40 50 60 70 80 66 61 62 67 Total Loan Total Lease Overall Financing 0 20 40 60 80 100 8944 1260 8740 1056 Q1 2012 Q1 2013 New Lease Used Lease Leasing by Type 0 20 40 60 80 100 9622 309 9691 378 1 mo a 1 mo a Superprime Deep Subprime Subprime Nonprime Prime Q3 2014 Q1 2015 0 349 352 349 352 359 362 378 378 382 381 0 100 200 300 400 500 470 482 358 361 12 New Deep Subprime Subprime Nonprime Prime Superprime Superprime Used Average Monthly Payment Average New Amount Financed Q3 2014 Q3 2015 Q1 2014 Q1 2015 Q3 2014 Q3 2015 400 420 440 460 480 500 520 445 457 472 485 490 503 498 510 495 508 Deep Subprime Subprime Nonprime Prime Average Used Amount Financed Q3 2014 Q1 2015 300 320 340 360 380 400 a 3 a Q4 2012 Q4 2013 Q4 2014 Balances By Lender Type Outstanding Auto Loan Balances B Outstanding Auto Loan Balances B 0 200 400 600 800 1000 Finance Credit Union Captive Auto All banks 257 284 222 178 116 211 157 96 135 313 230 208 Bank Captive Credit Union Finance Other YOY Change Loan Balance Billions 0 5 10 15 20 25 30 35 31 25 24 9 Q1 2014 Q1 2015 Average Monthly Payment 0 100 200 300 400 500 412 405 13 24 25 36 37 48 49 60 Term Distribution 0 10 20 30 40 50 60 70 80 901 2537 079 6470 Q4 2012 Q4 2013 Q4 2014 Total Open Balances 0 200 400 600 800 1000 800 886 721 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 New Lease Share of New Financing 0 5 10 15 20 25 30 1768 2362 2440 2764 2379 New Used Q1 2012 Q1 2013 Average Term 0 10 20 30 40 50 60 70 80 66 61 62 67 Total Loan Total Lease Overall Financing 0 20 40 60 80 100 8944 1260 8740 1056 Q1 2012 Q1 2013 New Lease Used Lease Leasing by Type 0 20 40 60 80 100 9622 309 9691 378 1 mo a 1 mo a Superprime Deep Subprime Subprime Nonprime Prime Q3 2014 Q1 2015 0 349 352 349 352 359 362 378 378 382 381 0 1 2 3 4 5 6 7 8 600 700 800 Q3 2009 Q3 2008 Q3 2007 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q1 2009 Q1 2008 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q4 2012 Q4 2013 Q4 2014 Average New Score Average Used Score 710 722 736 733 728 723 716 713 710 642 647 661 661 657 652 648 650 650 Average Loan Credit Scores By Vehicle Type 10 15 20 25 30 35 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015 Lease of New Financing Lease of All New Lease of Total 2275 1023 1809 2269 1846 1030 2440 2028 1169 2722 2307 1326 2914 2471 1448 3109 2693 1543 Consumer Leasing Q3 2015 Market Share By Lender Type Percentage of Open Loans by Risk Segment 0 20 40 60 80 100 Deep Subprime Prime Nonprime Subprime Super Prime Bank Bank BHPH BHPH Used New Captive Captive Credit Union Credit Union Finance Finance 1999 2043 4113 1856 1677 355 2000 4085 1855 1685 375 375 4080 1846 1656 Risk Distribution of Auto Loans 0 20 40 60 80 100 Subprime Prime 593 538 407 581 419 556 444 548 452 462 576 424 Deep Subprime New Loan Used Loan SubprimeNonprime Prime Super Prime YOY Change in Open Loan Volume Q2 2014 Total Loan Market Share 560 508 547 7905 383 Bank 3490 BNHP 758 Captive 2721 Finance 2721 Credit Union 2721 25 36 37 48 49 60 61 72 73 84 Vehicle Financing By Term 0 10 20 30 40 50 30 58 43 113 206 237 435 413 275 162 32 a 35 a 171 a 120 a YOY Change In Market Share 15 12 9 6 3 0 3 6 9 24 17 135 54 29 03 78 01 50 67 0 20 40 60 80 100 477 982 5162 015 3364 3560 1174 753 2388 2125 0 1 2 3 4 5 6 7 8 Q1 2009 Q1 2008 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q4 2012 Q4 2013 Q4 2014 Percentage of Open Loans by Risk Segment 0 20 40 60 80 100 Deep Subprime Prime Nonprime Subprime Super Prime Bank BHPH Used New Captive Credit Union Finance 1999 2043 4113 1856 1677 355 2000 4085 1855 1685 375 375 4080 1846 1656 Risk Distribution of Auto Loans 0 20 40 60 80 100 Subprime Prime 593 538 407 581 419 556 444 548 452 462 576 424 Deep Subprime SubprimeNonprime Prime Super Prime YOY Change in Open Loan Volume Q2 2014 Total Loan Market Share 560 508 547 7905 383 Bank 3490 BNHP 758 Captive 2721 Finance 2721 Credit Union 2721 25 36 37 48 49 60 61 72 73 84 Vehicle Financing By Term 0 10 20 30 40 50 30 58 43 113 206 237 435 413 275 162 32 a 35 a 171 a 120 a YOY Change In Market Share 15 12 9 6 3 0 3 6 9 24 17 135 54 29 03 78 01 50 67
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