The TransUnion Q4 2017 Industry Insights Report found a number of indicators that point to a controlled tightening of underwriting for subprime car leads – something that Auto Credit Express can help your dealership successfully withstand.

The Q4 2017 Industry Insights Report

dealership salesmanTransUnion released the findings from their Q4 2017 Industry Insights Report last week. The quarterly report analyzes data across the auto, credit card, mortgage, and personal loan credit markets.

This time around, TransUnion analysts highlighted a number of factors that point to a stabilizing auto lending market. Here a few of the big takeaways:

  • A Slowing Growth in Car Loan Balances: Overall auto loan balances increased 5.5 percent in the fourth quarter of 2017 compared to one year earlier. According to TransUnion data, this was the lowest annual growth since between Q2 2011 and Q2 2012.
  • Originations Decline Once Again: Auto loan originations fell to 7.1 million in the third quarter of 2017 (note that TransUnion looks at originations from the prior quarter to account for reporting lags); this on the heels of 7.5 million originations in both Q3 2016 and Q3 2015. The agency attributes the decline to an 8.2 percent annual drop in buyers in the subprime, near prime, and prime tiers.
  • Serious Delinquencies Remained Flat: Serious car loan delinquency rates per borrower – which TransUnion defines as borrowers 60 days or more past due – improved by a single basis point (0.01 percent) to 1.43 percent in Q4 2017.

Together, these factors point to a continuing tightening of auto lending.

What This Means for Subprime Car Loans

Brian Landau, TransUnion's automotive business leader and senior vice president, believes we're seeing a steady slowdown in the lower portion of the credit spectrum.

"These metrics reflect the continuing tightening of underwriting, particularly for prime and below risk tiers," Landau said in the report.

Two of the biggest data points that reinforce this belief are the 8.2 percent drop in originations for prime, near prime, and subprime borrowers, and the fact that the number of subprime borrowers with an auto loan balance dropped 1.7 percent between Q4 2016 and Q4 2017.

"We have a number of people in the industry who have gone through a number of cycles to know what to anticipate," Landau told SubPrime Auto Finance News. "They're being very proactive to any of the underlying trends they're seeing. That's why you're seeing a slight tightening of underwriting policies and pricing."

Your Dealership Can Still Thrive in Subprime

The overall market may be pulling back on subprime, but your dealership can still thrive in the space with the help of Auto Credit Express.

We're a leading originator and provider of subprime car leads and are ready to help you get qualified buyers in your door. We also provide BDC and CRM solutions so you can focus on selling cars, and our LotPro auto dealer software can help you maximize efficiency and profits on your subprime deals.

If you're ready for more customers, reach out to us today by calling 888-535-2277 or filling out our contact form online.