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Equifax: Auto Finance Companies Significantly Originating More Loans than Banks and Credit Unions in Today's Economy

November 2, 2011

 

ATLANTA -- Auto finance companies have significantly increased lending by more than 47% over the past two years, according to the latest Equifax National Credit Trends Report.

Auto finance lenders have outpaced bank and credit union lending to subprime borrowers* over the past 2 years as well.

According to the most recent monthly report, there were 854,800 auto finance company-originated loans in July 2011 vs. 581,300 for July 2009. Auto loans to subprime borrowers now account for 38.5% of all auto loan originations for auto finance companies and 17.6% for banks and credit unions – numbers that are quickly approaching pre-recession levels. By contrast, 820,200 loans were originated by banks and credit unions for the same period in July 2011 vs. 832,000 for July 2009. (a decrease of less than 2%)

Delinquency rates continue to improve for outstanding auto loans currently 60 or more days past due lowering to 1.63% of loans compared to rates that peaked near 3% in late ), reflecting a continuation of sustained credit retraction that the auto lending industry is experiencing earlier than other loan types, said Michael Koukounas, Senior Vice President of Special Client Services for Equifax.

"With unemployment rates remaining elevated for a prolonged period, auto lenders have proactively adopted more comprehensive data and verification tools for greater loan-level transparency in evaluating a wider band of consumers, which has helped enable the auto lending industry to recover more quickly than others," he added. In July 2011, 1.7 million auto loans were originated worth $32 billion collectively. From January-July 2011, 11.3 million new auto loans had been originated (a 13.2% increase over January-July 2010 totals) — worth a collective $213.9 billion (+14.8% increase over the amount totals for the same six month period in 2010).

The last report also revealed that average monthly payment has remained relatively unchanged over the past year (from $404 in July 2010 to $407 in July 2011 for auto finance company-originated loans; and from $377 in July 2010 to $364 in July 2011 for bank and credit union-originated loans), clearly showing that the growth the industry is experiencing is tied to increases in number of loans rather than an increase in average loan amount.

*Subprime borrowers are defined as consumers with Equifax credit scores below 640.

About Equifax, Inc.
Equifax is a global leader in consumer and commercial information solutions, providing businesses of all sizes and consumers with information they can trust. We organize and assimilate data on more than 500 million consumers and 81 million businesses worldwide, and use advanced analytics and proprietary technology to create and deliver customized insights that enrich both the performance of businesses and the lives of consumers.
Headquartered in Atlanta, Equifax operates in four continents and 15 countries, is a member of Standard & Poor's (S&P) 500® Index. Its common stock is traded on the New York Stock Exchange under the symbol EFX. For more information, please visit www.equifax.com.

11/02/11

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