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 Analysis Chapter
The Subprime Auto Loans industry is composed of banks, credit unions, financing companies and captive firms that underwrite automotive loans for subprime borrowers, defined in this report as consumers with a credit score below 620. Subprime borrowers have low FICO credit scores caused by limited or spotty credit histories and imperfect information on their financial status that restricts their access to credit. They are more sensitive to "cash in hand," or liquidity constrained, which means they are riskier borrowers with higher probabilities of delinquency and default compared with the overall automotive finance market.
According to Experian Automotive, about 88.3% of industry revenue comes from automotive loans and 11.7% comes from automotive leases... purchase to read more