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Study by NAF reflects the economy
In the most recent study conducted by Benchmark Consulting, the Nonprime Auto Financing Survey shows FICO scores rising and LTV ratios dropping.
Annual Nonprime Survey
Every year, the National Auto Finance Association conducts a survey of lenders to analyze year-end data. For this year’s survey, conducted by BenchMark Consulting International, 26 companies participated. These companies represented large (100,000 and more accounts), medium (from fewer than 10,001 up to 100,000 accounts) and small (less than 10,000 accounts) lending institutions. In total, over 3 million accounts were represented within the survey that represented principal balances of approximately $40 billion. Here at Auto Credit Express, we would like to share the feedback with you.
The results were separated into two different categories – new vehicle originations and used vehicle originations:
For both new and used vehicles, the tightening of lending guidelines can be seen in higher FICO scores for both new and used vehicles. The average new vehicle score rose by 7 points, while the average used vehicle score rose by 5 points. Stricter parameters were also evident in the funding amounts, which dropped by an average of $279 for new vehicles and $137 for used cars.
The tightening of credit was also reflected in lower contract volume and lower loan to value ratios for new vehicles.
Surprisingly, even though the average financed amount dropped, the number of contracts with extended terms increased. New vehicle contracts with extended terms increased from 85% of originations to 91% of originations, while used car contracts with extended terms rose from 53% of originations to 60% of originations – a 13% increase year over year.
Survey reflects the economy
Overall, the survey seems to reflect current market conditions not only in the subprime sector, but in the overall lending sector as well. As market conditions continue to be squeezed by tighter lender requirements and continued stress on consumers, it becomes more and more important to make your special finance department as efficient as possible.
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Nobody makes a better product for your subprime department than Auto Credit Express. LotProOnline subprime auto software is designed to make your department more efficient and more profitable. Our program allows you to view a snapshot of your used car inventory and see how it matches up against both NADA and Kelley Blue Book values. Our subprime auto sales leads, designed around the dealership experience, are the best in the country. For more information contact us at 888.535.2277 or by using our quick contact form.
