Auto interest rates hit lowest levels since 2008, according to Experian Automotive
Low interest rates, longer loan terms and growth in subprime help make it a good time for shoppers to buy a car
Schaumburg, Ill., Feb. 23, 2012 — Experian Automotive today announced that the automotive loan market showed continued improvement, with interest rates for new and used vehicle loans reaching the lowest levels since 2008, according to its quarterly automotive credit analysis. In Q4 2011, average credit scores for new and used vehicle loans also dropped, the percentage of loans to customers with nonprime, subprime or deep subprime credit scores increased, and lenders increased their willingness to make loans between six and seven years long.
“The improved automotive lending market is good news for consumers in the market to buy a vehicle,” said Melinda Zabritski, director of automotive lending at Experian Automotive. “The confluence of low interest rates, longer loan terms and an increase in loans outside of prime provide a great opportunity for more people to find a vehicle that suits their needs.”
Consumers also continued to do a better job of repaying loans in Q4 2011, as loan delinquencies fell. The 30-day delinquency rate fell 6.57 percent from Q4 2010 to Q4 2011 (2.98 percent to 2.79 percent). The 60-day delinquency rate fell 9.51 percent from 0.79 percent in Q4 2010 to 0.72 percent in Q4 2011.
Another positive sign for the lending market is that the overall dollar volume of loans at risk dropped to $18.5 billion, a $1.862 billion drop from Q4 2010. Meanwhile, the total volume of open loans rose by $23.9 billion in Q4 2011 to $658 billion.
“Lenders are clearly on much more solid ground than they were two or three years ago,” said Zabritski. “With delinquencies and total dollar volume at risk down, lenders have been able to adopt more aggressive strategies. This tends to benefit everyone, from lenders to automotive retailers to the end consumer. With more lenders aggressively competing for business, it’s a great time for consumers to buy or finance a vehicle.”
Complete findings from the Q4 2011 credit trends analysis will be presented in a Webinar on Tuesday, Feb. 28, at 11 a.m. Pacific time/1 p.m. Central time/2 p.m. Eastern time. If you would like to register for the event, visit www.experian.com/automotive.
Highlights from Q4 2011 include:
• Average interest rates for new vehicle loans fell to 4.52 percent in Q4 2011, down from 4.84 percent in Q4 2010. Average rates for used vehicle loans fell to 8.68 percent in Q4 2011, down from 8.71 percent in Q4 2010.
• Average credit scores for new vehicle loans dropped six points from 767 in Q4 2010 to 761 Q4 2011. Average credit scores for used vehicle loans dropped nine points from 679 in Q4 2010 to 670 in Q4 2011.
• New vehicle loans to nonprime, subprime and deep subprime customers increased by 13.8 percent from Q4 2010 to Q4 2011.
• Loans of 73 to 84 months accounted for 14.1 percent of all new vehicle loans, up 47.1 percent from Q4 2010. Loans of 73 to 84 months accounted for 9.04 percent of all used vehicle loans, up 41.1 percent from Q4 2010.
Experian Automotive’s quarterly credit trend analysis features market reporting data and analysis from its AutoCount® Risk Report, which analyzes automotive lending markets based on a uniform measurement of credit quality that segments markets by geography, credit score and vehicle registrations, among other factors. It also incorporates data from the Experian–Oliver Wyman Market Intelligence Reports, which provide topical, quarterly analysis; peer benchmarking options; and commentary on key issues facing the financial services industry.
For more information on Experian Automotive’s AutoCount Risk Report, visit www.autocount.com. To subscribe to the Experian–Oliver Wyman Market Intelligence Reports, go to www.marketintelligencereports.com.
About Experian Automotive
Experian Automotive is a leader in providing information services and market intelligence to manufacturers, dealers, finance, insurance and aftermarket companies, helping them increase customer loyalty; target and win new business; and make better lending, purchasing and production decisions. Experian’s AutoCheck reports provide customers with in-depth vehicle history information to confidently understand, compare and select the right vehicle. Its North American Vehicle DatabaseSM houses more than 650 million vehicles and, when combined with Experian’s credit, consumer and business information assets, meets the industry’s growing demand for an integrated information source. For more information on Experian Automotive and its suite of services, visit our Website at http://www.experianautomotive.com.
Experian® is the leading global information services company, providing data and analytical tools to clients in more than 80 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended 31 March 2011 was $4.2 billion. Experian employs approximately 15,000 people in 41 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
For more information, visit www.experianplc.com.