Experian: Shift Toward Used Continues in Q2
The subprime pullback continued in the second quarter. However, the big news was the continued shift toward used by consumers with prime and superprime credit.

SCHAUMBURG, Ill. — Car buyers with prime and superprime credit shifted toward used in greater numbers, with used-vehicle loans for both low-risk tiers reaching record highs in the second quarter, according to Experian Automotive.
According to the firm, a record 61.02% of prime consumers chose used vehicle loans, up 1.12 percentage points from a year ago. In the superprime category, a record 44.32% of superprime customers took out used-vehicle loans, 1.06 percentage points higher than a year ago. The shift comes as new-vehicle loan payment reached a record $504, about a $139 difference from the average used-vehicle loan payment.
"One of the trends that we've consistently seen is all-time highs and record-highs of prime-plus consumers who are choosing a used vehicle," said Melinda Zabritski, senior director of financial solutions at Experian Automotive, adding that the gulf between payment amounts has played a major role in the new-to-used shift.
The used-vehicle market, however, wasn’t the only solution for car buyers seeking payment relief. Loan terms, which continued to stretch during the period, were also a go-to option in the second quarter.
According to Experian, the 61- to 72-month term band did lead the way in the second quarter, accounting for 40.4% of all new-vehicle loans. However, the 73- to 84-month and 85- to 96-month bands showed the largest growth.
The share of loans in the 73- to 84-month range increased 1.22 percentage points from a year ago to 32.5%, while the 85- to 96-month band increased 0.3 percentage points to 32.5%. Zabritski noted that a majority of loans in the latter range were primarily clustered around 85 months.
Also reaching a new record was the balance of outstanding loans, which increased from $1.027 trillion in the year-ago quarter to a new high of $1.1 trillion. The new high was achieved as delinquencies, which have caused a slight tightening in underwriting standards in recent quarters, showed some improvement.
According to Experian Automotive, the 30-day delinquency rate inched down 0.02 percentage points to 2.2%, while the 60-day rate increased slightly by 0.05 percentage points to 0.67%.
The improvement in delinquencies didn’t translate into a loosening of credit standards, however, with the share of subprime lending in the second quarter dropping from 21.46% in the year-ago quarter to a near-record low of 20.57%. Deep subprime also showed no improvement, falling 0.08 of a percentage point to a near low of 3.98%.
"The last time deep subprime was below 4% for a Q2 period was way back in 2012, and it was 3.77%," Zabritski noted. "The all-time Q2 low was seen back in 2011. It was about 3.64%, but, again, we're still near historic lows for deep subprime in the total loan market."
Originally posted on F&I and Showroom
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