Auto loans to subprime consumers dropped to record lows in Q3

Credit scores, average monthly payments and loan amounts all on the rise

Schaumburg, Ill., Dec. 05, 2016 — Despite lingering subprime bubble rumors, the automotive financing market continues to get stronger and stronger. In fact, Experian’s latest State of the Automotive Finance Market report shows that loans extended to consumers in the subprime tier fell 4.5 percent from the previous year, and loans to deep-subprime consumers dropped 2.8 percent to the lowest level on record since 2011. Looking specifically at used vehicle loans, the subprime sectors saw an even larger decrease. Loans to consumers with deep-subprime credit were down 5.3 percent to 5.11 percent, the lowest we’ve seen on record since tracking began in 2007.

Newly originated loans to prime borrowers jumped 2 percent to encompass nearly 60 percent of auto loans financed in Q3 2016.

“For anyone making doomsday predictions about a subprime bubble in the auto industry, Q3 2016 provides a stark reality check,” said Melinda Zabritski, Experian’s senior director of automotive finance. “This quarter’s report shows that lenders are reducing the percentage of loans to the subprime and deep-subprime risk tiers while increasing the percentage to consumers with good credit. The most important takeaway here is to understand the market reality and not to be led astray by rumors or unsubstantiated facts. By doing so, lenders, dealers and consumers are able to make smarter decisions and more easily explore financing programs and other opportunities available to them.”

The report also found that average credit scores for both new and used vehicle loans are on the rise. For new vehicle loans, the average credit score climbed two points to 712 in Q3 2016, marking the first time average credit scores for new vehicle loans rose since hitting a record high of 723 in Q2 2012. For used vehicle loans, the average credit score jumped five points to 655.

Thirty-day delinquencies were flat year-over-year, at 2.36 percent. However, 60-day loan delinquencies were up slightly, moving from 0.67 percent in Q3 2015 to 0.74 percent in Q3 2016.

Credit unions gain market share as consumers search for low interest rates

Perhaps the biggest shift from Q3 2015 to Q3 2016 was the growth in market share for credit unions. Credit unions grew their share of the total loan market from 17.6 percent in Q3 2015 to 19.6 percent in Q3 2016. For new vehicle loans, credit unions grew their share by 22 percent, going from 9.9 percent in Q3 2015 to 12 percent in Q3 2016.

According to the report, interest rate increases played a key role in helping boost credit union share. Interest rates for the average new vehicle loan went from 4.63 percent in Q3 2015 to 4.69 percent in Q3 2016.

“Credit unions typically have the most competitive interest rates, so any time rates jump overall, it’s a natural reaction for credit unions to see a rise in their market share,” Zabritski continued. “With vehicle prices and loan dollar amounts rising, car shoppers are looking for any relief they can get. Credit unions’ traditionally lower rates are obviously an attractive option.”

Other key findings for Q3 2016:

  • Total open automotive loan balances reached a record high of $1.055 billion.
  • Used vehicle loan amounts reached a record high of $19,227, up by $361.
  • The average new vehicle loan amount jumped to $30,022 from $28,936.
  • Share of new vehicle leasing jumped to 29.49 percent from 26.93 percent.
  • The average monthly payment for a new vehicle loan was $495, up from $482.
  • The average new vehicle lease payment was $405, up from $398.
  • The average monthly payment for a used vehicle loan was $362, up from $360.
  • The average loan term for a new vehicle was 68 months.

For more information regarding this quarter’s analysis, you can view the recorded webinar at To purchase historical information from Experian Automotive’s historical research, visit

Roslyn Whitehurst 
Experian Public Relations 
1 714 830 5578 
Twitter: @RozWhitehurst

About Experian Automotive
Experian Automotive provides information services and market intelligence that enables results-driven professionals to gain the fullest possible understanding of the market, the vehicles and the people who buy them. Its North American Vehicle DatabaseSM houses data on nearly 700 million vehicles and, when combined with Experian’s credit, consumer and business information, provides an integrated perspective into the automotive marketplace. Experian Automotive’s AutoCheck® vehicle history reports provide dealers and consumers with in-depth information, allowing them to confidently understand, compare and select the right vehicles. For more information on Experian Automotive and its suite of services, visit our website at

About Experian
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