F&I and Showroom, October 2013

Auto Finance loan dollars 30 days delinquent which increased by 761 million from a year ago On a percentage basis however delinquencies represented just 196 percent of the total loan balance down from 205 percent in 2012 Sixty day delinquencies accounted for just 042 percent of the total loan portfolio dollar value remaining fl at on a year overyear basis Lower delinquency rates also led to lower repossessions During the second quarter 036 percent of all vehicle loans ended in a repossession a 148 percent drop from the year ago period That level also represents a 122 percent decrease from the previous low of 041 percent which was recorded in the second quarter 2006 Gains for Below Prime Financing Vehicle sales are also getting a boost from a burgeoning below prime credit market as fi nance sources continue to open their doors to credit challenged customers In the second quarter nonprime subprime and deep subprime new vehicle loans captured a 2745 percent share of the market up from 2541 percent in 2012 On the used vehicle side nonprime subprime and deep subprime loans grabbed a 5731 percent Big Leap for Leasing New Lease Share of New Financing 30 25 20 15 10 5 Total Outstanding Loan Balance 800 700 600 500 400 300 200 100 87 148 203 103 167 214 243 267 34 F I and Showroom October 2013 share of the market up from 5646 percent in the year ago period These trends pushed average credit scores for auto loans down in the second quarter with the average score for new vehicle loans falling from 753 in the year ago period to 749 For used vehicle loans the average score fell two points from a year ago to 660 in the second quarter The second quarter also saw an increase in the average amount fi nanced which rose to 26526 from 25714 in the year ago period For used the average amount fi nanced increased to 17913 from 17433 in the second quarter 2012 The bad news is average charge off amounts rose increasing 6768 in the yearago period to 7218 this year The Payoff The automotive lending market continues to be remarkably strong Even with the rise in subprime lending in recent months consumers are doing an excellent job of paying back their loans in a timely fashion And with lower repossessions and delinquencies the risk fi nance sources are taking seems to be paying off As new vehicle sales continue to exhibit strength and interest rates remain relatively low car shoppers much like Willie Sutton are likely to go where the money is If payments stay strong and interest rates stay low the automotive fi nance market should continue its positive momentum Of course lenders and dealers will need to keep a close eye on delinquencies and unemployment statistics moving forward An uptick in either area would be the fi rst dark cloud the industry has seen in a few years Melinda Zabritski serves as director of automotive credit for Experian Automotive E mail her at melinda zabritski@ bobit com Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 0 1768 2362 2440 2764 2379 Dollar Volumes Up Sharply Q2 2012 Q2 2013 Billions 0 Bank Captive Credit Union Finance ISTOCKPHOTO COM EYECRAVE