Industry Analysis & Industry Trends
The Subprime Auto Loans industry is rebounding strongly from effects of the recession, but performance still remains below prerecessionary levels. New car sales, improving consumer finances and continued strong demand growth from subprime borrowers and investors are forecast to spur industry growth over the next five years. However, faster growth will be restrained by rising interest rates that will raise borrowing costs and slow vehicles sales.... purchase to read more
Industry Report - Industry Products Chapter
Subprime loans are those made to consumers who have credit scores below 620. Subprime loans are particularly attractive for banks because they can charge higher interest rates. The average interest rate for a deep subprime loan (i.e. loan to someone with a credit score below 550) on a new car is as high as 13.1%, compared with 3.0% for consumers with the highest credit scores. In 2014, subprime auto loans are expected to account for roughly 19.9% of total open automotive outstanding loans.
Used car loans
Used car loans make up a greater percentage of total auto loans compared to new car loans. In 2014, the average amount financed for a used vehicle is estimated to total $15,029 compared with $14,832 one year ago, according to Experian Automotive... purchase to read more