The market share for nonprime, subprime and deep subprime lending for new vehicles expanded 13.6 percent in the third quarter over the same period a year ago, according to a report by Experian Automotive.
The report, released Tuesday, said lending to higher risk new-vehicle customers grew to 24.8 percent of total loans in the third quarter compared with 21.9 percent in the same quarter last year.
The subprime market for used-vehicle financing grew by 5.5 percent to 54.4 percent of total loans in the latest quarter vs. 51.6 percent a year ago, the report said.
Leasing grew by 7.5 percent from the same quarter last year, Experian said.
“With leasing showing a continued upward trend, and lenders increasing their appetite for risk, consumers were in a good position to obtain a vehicle during Q3,” Melinda Zabritski, director of automotive credit at Experian Automotive, said in a statement.
“Expanding loans to lower-risk tiers opens the market for more car shoppers, while an increase in leasing means it is easier for consumers to get more vehicle for a lower monthly payment. Both of these trends are positive signs of a strong and recovering auto finance market, which ultimately benefits the consumer and the entire auto industry.”
As subprime lending increased, the average credit score for new-vehicle loans dropped from 763 last year to 755 during the latest quarter.
On a per-vehicle basis, Volvo new-vehicle buyers had the highest credit score at 818 while the 694 average score for Mitsubishi customers was the lowest.
The average new-vehicle financing amounts rose to $25,963 during the third quarter from $25,873 in the year-earlier period. For used vehicles, financing amounts averaged $17,577 in the third quarter, up from 2011’s $17,359.
Among the brands, the report said Toyota grabbed 14 percent of all new vehicles financed, Ford came in second at 13.1 percent, and Chevrolet followed at 11.1 percent. Honda, at 10.2 percent, and Nissan, at 8.2 percent, rounded out the top five, according to the report.
The rankings for previous quarters were not immediately available this morning.
via Automotive News.