Equifax discovers upward trend in subprime auto loans
Alpharetta, GA (May 16, 2019)- Equifax-a global data, analytics, and technology company- provides the latest auto credit trends regarding subprime auto loans. Through January 2019, Equifax has discovered an increase in both subprime loan origination and balance activity. Currently, auto loan originations have a $7.07 billion balance, which is a 5.3% year-over-year increase. Furthermore, $18,934 is the average subprime loan amount, which is a 5.0% percent increase from January 2018.
Subprime auto loans are auto loans given to potential vehicle owners with little credit histories or low credit scores; ranging usually at 620 or below. The increase in such type of loans show potential of lasting interest in used vehicles by consumers.
“While subprime origination activity and balances remain steady and in check, the data is showing an increase entering the year," said Jennifer Reid, Equifax’s vice president of Automotive Marketing and Strategy. "Prices on new cars and trucks continue to rise, but I think we're seeing more evidence through subprime numbers that there is continued interest and activity in used vehicles for 2019. We anticipate this will persist in the coming months."
Key Findings:
Auto Loan:
~1.78 million auto loans, totaling $41.3 billion, have been originated year-to-date. This is a 0.8% increase in accounts and a 2.8% increase in balances over this time last year.
~Auto loans represent 86.5% of all auto account originations and 89.5% of auto origination balances YTD.
~379,100 auto loans have been originated YTD to consumers with a VantageScore® 3.0 credit score below 620. These are generally considered subprime accounts. This is a 1.9% increase from January 2018. These newly-issued loans have a corresponding total balance of $7.07 billion, a 5.3% increase year-over-year.
~Through January, 21.3% of auto loans were issued to consumers with a subprime credit score, and they accounted for 17.1% of origination balances. In 2018 YTD the account share was 20.7% and balance share was 16.4%.
~The average origination loan amount for all auto loans issued in January 2019 was $23,464. This is a 3.3% increase over January 2018. The average subprime loan amount was $18,934. This is a 5.0% increase compared to January 2018.
Auto Lease:
~279.4 thousand auto leases, totaling $4.8 billion, have been originated year-to-date. This is a 3.4% decrease in accounts and a 3.0% increase in balances, from this time last year. Auto leases accounted for 13.6% of all auto accounts originated through January, and 10.5% of balances.
~25,000 auto leases have been originated YTD to consumers with a VantageScore® 3.0 credit score below 620. These are generally considered subprime accounts. This is a 3.3% decrease from January 2018. These newly-issued leases have a corresponding total balance of $462.1 million, a 4.6% increase year-over-year.
~Through January, 8.9% of auto leases were issued to consumers with a subprime credit score. Through January 2018 the share was the same.
~The average origination balance for all auto leases issued in January 2019 was $17,137. This is a 5.7% increase from January 2018. The average subprime lease amount was $18,150, a 6.3% increase over a year ago. Note that lease origination values reflect the contract amounts only and exclude expected vehicle residual values.
About Equifax
Equifax is a global data, analytics, and technology company and believes knowledge drives progress. The Company blends unique data, analytics, and technology with a passion for serving customers globally, to create insights that power decisions to move people forward. Headquartered in Atlanta, Equifax operates or has investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor's (S&P) 500® Index, and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs approximately 11,000 employees worldwide. For more information, visit Equifax.com and follow the company’s news on Twitter and LinkedIn.