The latest report from Experian shows subprime auto lending has hit an 11-year low. If your dealership wants to keep its subprime business going strong in this type of landscape, you're going to want to find leads of the highest quality.
Experian's Q3 2018 State of the Automotive Finance Market Report
The latest State of the Automotive Finance Market report, this one covering the third quarter of 2018, shows that borrowers with subprime credit (credit scores of 600 and lower) accounted for the lowest overall share of the auto loan market in 11 years. Loans to these borrowers made up 21.19 percent of the market, down 1.5 percent from a year ago.
However, Automotive News points out that recent reports from both the Federal Reserve Bank of New York and TransUnion indicate subprime origination volume increased in Q3 2018. It's just that bad credit borrowers are accounting for the lowest share of the car loan market because of an uptick in prime lending.
Experian's report shows that prime lending has greatly increased in the used vehicle market. Loans made to borrowers with prime and super prime credit (credit scores of 661 and higher) made up more than 50 percent of the used car market – the first time this has happened since the third quarter of 2010.
Conversely, subprime borrowers (credit scores of 501 to 600) only made up 22.86 percent of this market, and borrowers with deep subprime credit (credit scores of 300 to 500) accounted for just 4.33 percent. Both of these numbers represent the lowest percentages of the used vehicle loan market on record.
Experian believes this shift can be attributed to a number of factors. Consumers continually try to get lower monthly payments, and they're doing so by shopping used. The average monthly payment for a new car loan was $530 in Q3 2018 (a record high), compared to the average used vehicle loan payment of $381 (another record high). This $149 gap naturally leads to more consumers opting for the more affordable option.
This is happening at a time when interest rates are on the rise. The average rate for a new car loan was 5.73 in Q3 2018, while the average used vehicle interest rate was 9.03 percent. These represent increases of 0.63 percent and 0.31 percent, respectively, compared to rates in the third quarter of 2017.
Subprime Auto Leads for Your Dealership
We believe that the findings from Experian's latest report highlight the importance of making sure your dealership is submitting applicants of the highest quality to your lenders.
The average credit score for borrowers taking out a new car loan rose to 717 and to 661 for used vehicle loans in Q3 2018. Coupled with the fact that the share of subprime auto loans represented an 11-year low, your store has all the more reason to step its game up in the special finance department.
That's where Auto Credit Express comes in. We've been a top originator of special finance leads for over 20 years now, and we recently claimed the Platinum Award for Special Finance Leads in Auto Dealer Today's 2018 Dealer's Choice Awards – and we want to deliver these buyers to your doors.
Our vast web presence is buoyed by extensive search engine optimization, pay per click advertising, and partnerships with well-known car buying portals. Plus, our years of experience have made us an authority on subprime financing. Proactive consumers find our service online every day, and we prep these leads to buy at dealerships all across the country.
Our leads are a cut above the rest because we go above and beyond to prep buyers for the subprime financing process, and our BDC call center specialists are experts at increasing contacts, appointments, and shows. Your store can even set filters to target your ideal customers in an area of your choosing, and regulate lead flow and volume on the fly.
We want to provide some of the heavy lifting to help take your subprime department to the next level. Learn more about our subprime auto leads and other great dealership products and services today. Give us a call at 888-535-2277 or fill out our online contact form and we'll reach out to you.