SCHAUMBURG, Ill. (9/5/14)--The pace of new-vehicle lending to subprime and deeply subprime borrowers appears to be slowing, according to Experian Automotive in its State of the Automotive Finance Market report.
In the second quarter, subprime and deep subprime auto lending made up 15.1% of the market, a 7-point drop year-over-year.
While subprime auto lending still hovers near its highest point since the economic downturn--up 10.2% since the peak of the recession--it still falls short of prerecession highs, including 16.6% in 2008 and 19.9% in 2007.
Used-vehicle loans have seen a similar trend of late. Used-vehicle loans extended to subprime and deep subprime borrowers comprised 40.2% of the market in the second quarter, down from 50.6% during the same period last year.
"Although we've 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, Experian senior director of automotive finance.
"As for consumers," she added, "as long as those in these higher-risk segments continue to pay their bills on time, keep delinquent balances in check and select a vehicle that fits within their budget, they should still be able to obtain the necessary financing to purchase a vehicle that meets their needs."
The average loan amount extended to subprime borrowers for a new vehicle fell in the second quarter to $27,347 from $27,563 year-over-year. For deep subprime borrowers, the average loan amount dropped to $24,836 from $25,486 year-over-year.
For used vehicles, the average loan amount offered to subprime borrowers was $16,546 in the second quarter, down from $17,020 last year, while for deep subprime borrowers the average amount fell to $14,358 from $15,113 over that same stretch.