SCHAUMBURG, Ill. (5/19/15)--The overall share of auto loans held by subprime and deep-subprime borrowers dropped to its lowest level since 2012 in the first quarter, according to a recent report from Experian.
At the end of March, subprime loans occupied 16.2% of the market, while deep subprime loans made up 3.5%.
“Over the last year, there has been a tremendous amount of conversation around the growth in subprime loans, and the concern over the automotive finance industry approaching a potential ‘bubble,’” said Melinda Zabritski, Experian senior director of automotive finance. “While it’s true that the volume of subprime loans is up, the same can be said for the rest of the risk categories.
“It’s important to keep in mind that, while we should continue to watch them, the percentage of subprime loans makes up a small portion of the market.”
Total outstanding balances for automotive loans climbed to a record-high $905 billion in the first quarter, marking an 11.3% year-over-year increase.
Further, both 30-day and 60-day delinquencies declined in the first quarter on an annual basis, with 30-day delinquencies falling 4.1% from the first quarter of 2014 and 60-day delinquencies dropping 3.2%.
“The current stability in the automotive market is a testament to consumers making timely payments on outstanding loans, which is evident in the improvement in delinquency rates,” Zabritski said.