Equifax: Subprime Pullback Continued in Q1
August 09, 2018
ATLANTA — Auto finance sources continued to pull back from the high-risk credit tiers in the second quarter, with subprime originations and balances falling 4.5% and 3.5%, respectively, according to Equifax.
The industry originated 7.96 million auto loans during the period totaling $179.7 billion, a 0.3% and a 2.7% increase in both accounts and balances. Subprime originations totaled 1.841 million during the period for a total balance of $32.9 billion, representing 23% of total originations and 18.3% of total balances.
During the first quarter of 2017, subprime's account and balance of total originations was 24.3% and 19.5%, respectively.
"Consumer Credit Trends show that originations through April of this year, as reported through June, both in terms of accounts (+0.5%) and balances (+2.3%) are up over the same time last year," said Gunnar Blix, deputy chief economist for Equifax. "Our data indicate that a bump in lease activity, as well as a continued shift toward affordable used cars, may be driving the trend, and these increases are primarily being driven by customers with prime credit.”
According to Equifax, the average amount financed in April was $22,917, a 3.6% increase compared to April 2017. The average subprime loan during the same period was $18,411, a 2.3% increase compared to April 2017.
On the least front, more than 1.31 million leases were originated during the first quarter totaling $21.34 billion — a 1.3% increase in accounts but a 1% decrease in balances compared to the year-ago period. According to Equifax, that was enough to account for 14.2% of all auto loans originated during the period, and 10.6% of balances.
The firm also noted that 124,300 of those leases were originated to consumers with subprime credit for a total balance amount of $2.14 billion — a 2.1 decrease in accounts and a 2.3% decline in balances. Subprime’s share of total leases was 9.5% during the quarter, with balances accounting for 9.8%.
The average balance of all leases originated in April was $16,329, a 3.04% decrease from April 2017. The average subprime lease amount during the same timeframe was $17,333, a 1.19% decrease from April 2017.