Fitch examines what’s ahead for captives


Fitch Ratings recently took a deeper look at the captive segment of auto financing, projecting their performance and potential revenue push toward their parent automaker.

Analysts determined the trend of rising leverage for U.S. captive auto finance companies, fueled by strong new-vehicle retail financing and lease demand, has moderated recently, according to Fitch Ratings' latest North American Financial Institutions Chart of the Month.

The firm explained the moderation in leverage more recently has been driven by less robust asset growth, strong earnings and capital generation, and in some cases a reduction in dividends paid to the OEM parents. Still, with the exception of American Honda Finance Corp. (AHFC), captives’ leverage remains above Fitch's implied financial benchmark, underscoring the importance of potential parent support in Fitch’s auto captive analysis.

In Fitch's view, captives’ elevated leverage is mitigated to some extent by solid credit performance, which has remained fairly stable despite concerns that looser underwriting standards over the past few years and an excess supply of used vehicles would lead to a sharp degradation in credit performance.

With the exception of GM Financial, which continues to transition to a full spectrum captive since its acquisition of subprime-focused AmeriCredit in 2010, Fitch Ratings indicated that captives’ installment contract and lease portfolios have remained predominantly prime-focused.

Fitch Ratings director Michael Taiano acknowledged that weakening used-vehicle prices in the first half of 2017 appear to have at least temporarily stabilized following the increase in vehicle demand in the wake of the hurricanes in Texas and Florida, and may benefit further from the positive effects of tax reform on the U.S. economy.

“Going forward, we expect leverage for the auto captives to remain fairly stable as new loan and lease demand slows following several years of strong growth, although strong earnings generation could lead to higher dividend payments to OEM parents,” Taiano said.

“While auto captives’ credit performance should continue to normalize over the medium term, the pace of normalization could moderate in the near term as a result of a strengthening U.S. economic backdrop,” he said.

TransUnion’s Q4 data shows ‘correction’ in auto finance


Brian Landau, senior vice president and automotive business leader at TransUnion, needed just one descriptive moniker to summarize the auto finance data from the fourth quarter — a correction.

The auto finance portion of TransUnion’s Q4 2017 Industry Insights Report released on Tuesday showed that while auto finance balances grew 5.5 percent between Q4 2016 and Q4 2017, this figure marked the lowest annual growth rate since a 5.3-percent rise in Q2 2012 over Q2 2011.

Despite a slowdown in balance growth, TransUnion observed a marked increase in the number of outstanding auto contracts — growing to 79.4 million in Q4 2017 compared to 75.8 million one year earlier.

“I believe it is a correction, just like whatever others in the industry might call it, because we’re starting to see not necessarily a sharp change happening with regard to originations or balances,” Landau told SubPrime Auto Finance News ahead of the report release. “It’s more of a slowdown in some parts of the credit spectrum. That to me means it’s a controlled tightening if you will.”

The TransUnion report showed originations also declined on a yearly basis for the fifth consecutive quarter, falling 4.8 percent in Q3 2017. The decline in originations was driven by an 8.2 percent yearly drop for the subprime, near prime and prime credit risk categories, though that was partially dampened by only a 0.2-percent annual decline in the prime plus and super prime risk categories.

TransUnion reiterated that originations are viewed one quarter in arrears to account for reporting lag.

Another important trend mentioned in the report included TransUnion determining that serious auto loan delinquency rates per borrower — contracts 60 days or more past due — also remained stable. The Q4 reading improved 1 basis point to 1.43 percent.

“It’s still a little too early to say whether or not we’re going to continue to see that trend. But it is a positive indicator that a correction is happening,” said Landau, while referencing that the latest rate is more than 20 basis points lower than the reading spotted during the worst of the Great Recession of 2008 and 2009.

So while some stock traders on Wall Street might cringe at the thought of a correction, Landau reiterated how in this case with respect to auto finance it’s an overall positive development.

“As we all know, finance companies have a number of different levers they can pull to match risk,” Landau said. “They can pull back on term. They can require a larger amount down at the point of purchase to reduce that (loan-to-value ratio). They can also adjust APR and the buy rate through the dealer to offset the credit risk that’s constantly changing. They’re always calibrating and recalibrating accordingly.

“The market is pretty resilient as I’ve said before,” he went on to say. “We have a number of people in the industry who have gone through a number of cycles to know what to anticipate. 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.”

Q4 2017 Auto Finance Trends
Auto Finance Metric Q4 2017 Q4 2016 Q4 2015 Q4 2014
 Number of Auto Loans  79.4 million  75.8 million  71.1 million  65.2 million
 Borrower-Level Delinquency Rate (60+ DPD)  1.43%  1.44%  1.27%  1.19%
 Average Debt Per Borrower  $18,597  $18,391  $18,004  $17,456
 Prior Quarter Originations*  7.1 million  7.5 million  7.5 million  7.0 million
 Average Balance of New Auto Loans*  $20,909  $20,743  $20,245  $19,710

*Note: Originations are viewed one quarter in arrears to account for reporting lag. Source: TransUnion

Overall credit trends

TransUnion highlighted that the consumer credit market concluded 2017 on a high note with strong performance across multiple credit products, according to TransUnion’s Q4 2017 Industry Insights Report powered by Prama analytics.

Analysts found that most indicators point to a healthy credit market, though there are a few signals that lenders are being more active in rebalancing portfolio risk.

“Consumers continue to gain access to more credit, and balances are generally rising at a healthy clip,” TransUnion vice president of research and consulting Matt Komos said in a news release.

“For the most part, consumers are paying their debts in a timely fashion, which has been especially evident for mortgages and personal loans,” Komos continued. “This is likely a result of the strong economy, which has helped consumers manage their personal balance sheets and build confidence.”

During 2017, TransUnion observed 20.3 million more accounts spanning auto, credit card, mortgage and unsecured personal loans. Analysts contend the growth is likely due to continued declines in the unemployment rate, which decreased to 4.1 percent in Q4 2017 compared to 4.7 percent in Q4 2016.

Additionally, the University of Michigan’s Index of Consumer Sentiment — a measure of consumer confidence — stood at 95.9 in December 2017, up 2 percent from December 2016.

“This demonstrates consumers have positive expectations regarding the overall economy, and we anticipate this will lead to higher consumer credit activity in the near future,” Komos said.

“While most indicators point to a fluid consumer credit economy, we are monitoring the market closely for any potential shifts,” Komos continued. “Material upticks in delinquency, interest rate increases beyond what is expected, or other unanticipated economic shocks could certainly impact the market adversely.”

TransUnion’s special website here contains more charts and details about the Q4 2017 Industry Insights Report.

6 questions to ask about your data security processes


Security for dealers and finance companies nowadays involves much more than just locking vehicles, the showroom and front door each night.

In fact, EFG Companies recently highlighted that data security is one of the largest areas of concern in 2018 for dealers, finance companies and their partners. According to the Identity Theft Resource Center and CyberScout, 1,579 data breaches occurred in 2017, representing a 44.7-percent increase year-over-year.

While retail automotive has been regulated under the Safeguards Rule of the 1999 Gramm-Leach Bliley Act, EFG Companies insisted that digital data was not considered an important area of focus until recent years.

This risk is driven in part by the rise of digital technology in the automotive market. From wirelessly connected cars to digital customer relationship management systems (CMS), data access points have increased exponentially.

A recent Frost & Sullivan report indicated that IT spending in the connected automotive market is projected to increase 17.3 percent from 2015 to 2025. However, the industry is just beginning to address how to protect private consumer information in a digital environment.

In the physical realm, it takes less than one minute and three pieces of information for a motivated thief to execute a security breach at a retail automotive dealership. In the digital realm, a computer hacker can gain access to payment processing software in seconds, grabbing data and exiting before the dealership is aware of the breach.

According to a 2017 study commissioned by IBM, the average cost of a single stolen data record is $141. The average total cost of a security breach was $3.62 million. The average probability of a company suffering a security breach within the next two years is 27.7 percent. 

“Machine learning and sophisticated hacking software will make data security an even more important component of the retail automotive sector,” said Maurice Hamilton, vice president, technology at EFG Companies.

“For example, we believe any company processing credit cards should complete PCI DSS compliance. Within three years, companies should also implement two-factor authentication. Granted, implementing data security technology is an expense. But, as research has shown, companies cannot afford a breach,” Hamilton continued.

Achieving data security

A study of more than 10,000 consumers by Gemalto revealed that 70 percent of consumers would stop doing business with a company if it suffered a data breach.

Furthermore, 69 percent of consumers believe that companies do not take consumer data security seriously.

EFG Companies recommends companies in the retail automotive buying chain utilize the acronym ADRIFT to ask the following questions as the first step in achieving data security.

1. Have I conducted a complete security risk assessment, including all access points and partners?

2. Does my written information security program document include procedures for each department that handles digital and physical consumer data?

3. Have I reviewed all reasonably foreseeable risks that could result in unauthorized disclosure or compromise of consumer data? Am I protecting customer information from collection to disposal?

4. Have I identified a designated person responsible for customer information security, with authority to implement the program?

5. How do I foresee manageable risks that could result in unauthorized disclosure of private consumer information? For example, am I overseeing partners that might have access to, or take possession of, customer information? Do my agreements with these partners require them to implement appropriate safeguards?

6. Does my company have sufficient training, oversight and procedures for securing private consumer data?

“From vulnerable photocopier hard drives to digital CRMs, we believe digital data security should be a key business objective for every retail automotive dealer, lender and partner,” said John Pappanastos, chief executive officer and president of EFG Companies.

“While important, simply locking a file cabinet or putting a screen protector on a monitor is not sufficient. We are calling on all participants in the retail automotive chain to lock down their data,” Pappanastos went on to say.

Credit unions generate record-setting originations pace in 2017

ONTARIO, Calif., and HAUPPAUGE, N.Y. - 

Credit unions continue to make significant strides in booking retail installment sales contracts and vehicle leases. CU Direct and GrooveCar’s CU Xpress Lease recently highlighted just how much success they enjoyed in 2017.

In fact at CU Direct, 2017 represented a record-breaking year.

Credit unions funded 1.8 million contracts through CU Direct’s Lending 360 and CUDL lending platform, generating a record $39 billion in credit union auto paper in 2017, and surpassing the company’s record $32 billion dropped into portfolios in 2016.

Further reflecting its growing marketplace strength, CU Direct credit unions have increased auto originations 100.8 percent since 2013.

Officials insisted that CU Direct credit union partners, as an aggregate, became the largest auto finance provider in the nation in 2017, experiencing 16.2-percent growth, the second highest loan origination growth rate among the top 10 market holders in the nation, according to data from AutoCount.

The company signed new agreements with 71 credit unions in 2017.  At year’s end 1,117 credit unions, serving 47.8 million members, were utilizing the company’s network of technology, including innovative platforms (CUDL, Lending 360), analytics and reporting (Lending Insights), auto-shopping tools (AutoSMART) and retail lending products (OnSpot Financing).

“We are pleased to once again provide a strong return on investment to our shareholders,” said Tony Boutelle, president and chief executive officer of CU Direct.  “Credit unions continue to demonstrate their ability to compete with banks and win in the auto lending marketplace.

“We remain focused on delivering innovative lending technology that helps our credit union partners make more loans and create a better member experience,” Boutelle continued.

And as a result of the auto finance performance, CU Direct also announced that the company’s board of directors approved a 3 percent cash dividend to its credit union shareholders for a record 13th consecutive year.

CU Direct continues to deliver a strong return on investment, generating exceptional value for its credit union shareholders. The company has grown from nine shareholders in 1998 to 108 shareholders in 2017.

CU Xpress Lease releases results for 2017

Meanwhile, GrooveCar’s CU Xpress Lease, the national vehicle lease program for credit unions, recently announced its 2017 performance results, too.

In 2017, nearly 15,000 leases were written by the operation. Since launching in 2006, more than 105,000 leases totaling greater than $4 billion have been funded, and each credit union has been repaid the full residual amount on more than 50,000 matured leases.

“CU Xpress Lease continues to outperform the competitors to deliver a program credit unions can compete with at the point-of-sale,” said Robert O’Hara, vice president of strategic alliances at GrooveCar.

O’Hara highlighted new programs are continually being added to help credit unions reach their lending goals. Making CU Xpress Lease unique are the one-on-one consultations designed to work with credit unions on strategies to penetrate markets served. 

“In southern California, for instance, CU Xpress Lease is seeing increased traction through expansion activities in that region along with the addition of a dedicated dealer relationship manager for that territory,” O’Hara said.

“Working directly with our partners and dealerships is just one of the ways we accomplish increased reach,” he continued. “This is one of the hottest lease markets in the country, credit unions without a lease program will miss out on nearly 70 percent of the new vehicles sold.

“Overall, leasing represents 30 percent of all new-car sales across the U.S., in urban areas this number climbs to 70 percent at select dealers. The goal for credit unions is to be competitive 100 percent of the time,” O’Hara went on to say.

Some other takeaways from 2017’s performance within the CU Xpress Lease program were:

• Average FICO score of 770

• Average term of 36 months

• 65 percent look-to-book

Because CU Xpress Lease manages and assumes all risk at lease maturity, for instance, collection of lease end fees, including termination fees, over mileage charges, excess wear and tear damage, and other fees, popularity of the program continues to climb. The following are just some of the ways the program reduces the burden on credit unions and their members:

• No surprises wear and tear lease return process

• Credit unions paid full residual amount on all matured leases — more than 50,000 leases

• Build and manage dealer relationships

• A team of lease specialists at the credit union’s disposal

Nominations now welcomed for The CEO Issue 2018

CARY, N.C. - 

It’s time again when SubPrime Auto Finance News engages with the industry for one of our most successful annual projects — "The CEO Issue."

In an ongoing effort to recognize the chief executive officers who are flourishing in today’s competitive marketplace, SubPrime Auto Finance News is asking the industry to nominate the CEOs of auto finance companies and their critical support service providers to be included in the March/April print edition that’s dubbed, “The CEO Issue.”

Between now and 5 p.m. ET on Feb. 20, nominations along with a high-resolution photograph and explanations as to why the CEO is successful can be sent to SubPrime Auto Finance News senior editor Nick Zulovich via email at nzulovich@cherokeemediagroup.com.

Here are some example questions to be answered to enhance nominations:

—What moves has the CEO made to place the company into position to be successful?

—How does the CEO cultivate a productive environment that inspires the organization at all levels?

—Why is this CEO an example of successful leader who lifts the value of not just the company, but also the entire industry?

To review the rundown of CEOs honored in last year’s issue, the digital version can be found here

SubPrime Auto Finance News publisher Bill Zadeits explained why this endeavor has become one of the highlights of the editorial calendar.

“As our industry continues to evolve, CEOs face many challenges to protect the prosperity of their organizations, not only in the present, but also several quarters and years down the road,” Zadeits said. “The auto finance industry is extremely fortunate to have some of the best leaders who handle those challenges quite well.

“Each year, our network of industry partners has raised its collective hand so we can showcase these impressive executives,” Zadeits continued. “We’re excited to learn more about each of these talented CEOs who will guarantee this $1 trillion economic pillar continues to flourish.”

Along with it being, “The CEO Issue,” the March/April edition of SubPrime Auto Finance News also will focus on both Vehicle Finance Conference hosted by the American Financial Services Association as well as the National Convention & Expo orchestrated by the National Automobile Dealers Association — signature industry events that run from March 20-25 in Las Vegas.

So if you have a longstanding relationship with or report to a CEO who should be included in “The CEO Issue,” send your nominations, images and responses to the sample questions listed above to SubPrime Auto Finance News editor Nick Zulovich at nzulovich@cherokeemediagroup.com. Nominations will be accepted through Feb. 20.

And be sure to get your copy of “The CEO Issue” delivered to your mailbox or grab one at the AFSA or NADA events. If you don’t already have one, get your free subscription by going to www.autoremarketing.com/subprime/subscribe.

Credit unions in 14 states join GrooveCar platform in Q4


GrooveCar recently highlighted credit unions from 14 different states joined its online vehicle buying program during the fourth quarter.

GrooveCar, which provides credit union partners with continuous support services, market consulting, marketing collateral support to optimize communications with members and more, indicated that 17 credit unions joined during Q4, raising the 2017 total to 84.

The company added that it has forged more than 250 credit union partnerships since 2015.

“This has been an exceptional year for helping credit unions reach new levels in auto loan growth,” said Robert O’Hara, vice president of strategic alliances at GrooveCar.

“It’s always gratifying to deliver a service that meets the members’ desire to shop for all their vehicle needs online,” O’Hara continued.

“Credit unions are steeped in member resources, an auto resource is another way to serve the member with what they are looking for,” he went on say.

The GrooveCar platform helps credit unions capitalize on the desire of members to research and purchase a vehicle. The program works to engage members at all stages, especially as the process begins.

GrooveCar can help credit unions close the sales and shopping loop between the member, the credit union and the dealership. When the credit union is in the initial sales space with the member, GrooveCar believes there is a distinct advantage for the credit union to maintain their relevance from the beginning.

Joining the program during Q4 were:

Abilene Teachers Federal Credit Union, serving 46,470 members with assets of $428 million
WesTex Community Credit Union, serving 11,003 members with assets of $80 million

Antioch Community Federal Credit Union, serving 1,572 members with assets of $27 million

Arsenal Credit Union, serving 25,548 members with assets of $227.2 million

Central Oklahoma Federal Credit Union, serving 2,839 members with assets of $29 million

Family Focus, serving 2,820 members with assets of $32 million

Georgia Power Valdosta Federal Credit Union, serving 3,579 members with assets of $24 million
Habersham Federal Credit Union, serving 3,724 members with assets of $20 million
Memorial Health Credit Union, serving 4,151 members with assets of $19 million

Hope Credit Union, serving 34,079 members with assets of $201 million

Lake Trust Credit Union, serving 180,000 members with assets of $1.8 billion

Merrimack Valley Federal Credit Union, serving 47,883 members with assets of $598 million

N.E.W. Credit Union, serving 10,120 members with assets of $87 million

Tobacco Valley Teachers Federal Credit Union, serving 3,873 members with assets of $47 million

University Credit Union, serving 17,212 members with assets of $206 million

Wauna Federal Credit Union, serving 24,222 members with assets of $232 million

West Metro Schools Credit Union, serving 2,500 members with assets of $28 million

With the number of vehicles on the road continuing to climb, vehicle ownership and financing remains a priority for a member at all stages of life. It’s important for credit unions to provide a resource that can serve members’ needs with the latest digital shopping tools.

“Our responsive technology delivers all the features the member enjoys when starting the process, just curious or full-on ready to buy,” O’Hara said. “We help keep the credit union connected at all stages with lead generation tools built into such features as; vehicle searches and saves, loan calculation, trade-in values, free CARFAX reports and other valuable interactive features."

More details are available at www.groovecar.com.

Ally pledges $750M to buy contracts from DriveTime


DriveTime might be still searching for a new chief executive officer, but the retailer that specializes in working with consumers with soft credit now has more resources for originations.

Ally Financial on Wednesday announced that it has entered into an agreement to purchase retail contracts from DriveTime.

Under the agreement, Ally will make up to $750 million available to DriveTime for the purchase of retail contracts over the coming year.

“We’re excited to work with DriveTime to provide committed financing that frees up capital it can use to grow its business,’’ said Tim Russi, president of auto finance at Ally.

“Our expertise allows us to support DriveTime in a way that complements our well-established indirect model,” Russi continued.

Under the terms of the agreement, Ally will provide committed financing for the purchase of retail contracts for 12 months. The agreement supports DriveTime’s expansion into the near prime segment.

“This relationship with Ally enables us to grow originations, diversify our retail and finance platforms and enter into a new consumer segment, while still maintaining the exceptional customer experience we take pride in delivering,’’ said Kurt Wood, chief financial officer of DriveTime.

“We appreciate Ally’s financing agility in implementing an innovative solution to meet our needs,” Wood added.

The relationship with Ally arrived about three weeks after DriveTime indicated that the company is currently searching for a CEO for its retail operations.

Enhanced workforce pushes CRIF Select to nearly $4B in originated volume


Boosting its workforce worked out nicely for CRIF Select.

CRIF Select, a division of CRIF Lending Solutions and provider of indirect auto finance partner programs, announced on Wednesday that the company surpassed $3.7 billion in funded paper volume for 2017.

Executives highlighted the milestone is the culmination of a year where CRIF Select renewed its commitment to being a dealership-friendly partner, connecting them to finance companies of all sizes across the country.

To strengthen ties with dealerships, CRIF Select increased its team of dealer-focused representatives to 18 fulltime staff members. It also reinvested in its operations by opening a new state-of-the-art office in Denver for its processing and support staff.

CRIF Select specializes in indirect auto finance partner programs. With an expert focus on dealer and market management, CRIF Select supports a client base of more than 3,500 auto dealers and 90 full-service auto lenders.

Client relationship managers and dealer representatives work together with both the finance company and dealer to create efficient and profitable partnerships that drive business for both sides.

Additionally, CRIF Select’s integrated, technology-based solutions make loan approvals faster, more accurate and virtually paperless, can deliver lower costs for institutions and better service for their customers and members.

By connecting finance companies and dealers through portals such as Dealertrack and RouteOne, CRIF Select can eliminate the traditional stress and hassle associated with dealerships finding the best financing offers in their local markets.

“Last year was a very important year for our team as we positioned ourselves to better serve our lender and dealer partners,” CRIF Select president Jeremy Engbrecht said. “Our expansion to new markets such as Georgia and Wisconsin as well as our renewed commitment to innovation has certainly helped us lead the way.”

3 suggestions for companies with underperforming employees


Automotive Personnel chief executive officer Don Jasensky offered three options when dealership and auto finance company management teams are faced with the decision of making manpower changes based on performance.

Jasensky leveraged his nearly 30 years of experience, acknowledging that, “Every leader has to make decisions regarding underachieving employees.”

He continued in a company blog post, saying, “When a leader determines that an employee is incapable or unwilling to perform at the required level, it is time to make a change.  Once a decision is made to replace an employee the question becomes whom do we replace the employee with?”

When considering that question, Jasensky emphasized three options:

—Do not replace the employee and spread the work among existing staff.

—Promote a person to the position, and replace the junior position.

—Look outside the company for an experienced high achiever.

If the company decides that finding a replacement outside the current workforce is the best option, Jasensky articulated four points to keep the issue with the underperforming employee from snowballing into a larger problem that could derail the positive start to 2018 the store or institution might be enjoying.

Among those points, he noted:

—It is best to find the replacement prior to terminating the employee. You do not want a position to go unfilled for very long.

—It is important that you talk to the best people available. Jasensky recommended that companies not limit themselves to respondents to an advertisement. 

“The best people are seldom looking,” he said. “At any given time, only 5 percent to 10 percent of employees are actively looking for a new position. You will be competing both in and outside your industry for their attention.

—If you are not interviewing the best candidates in the marketplace, Jasensky believes the company will not be hiring the best candidate.

—Jasensky also emphasized that managers should keep the position situation confidential.

“Turmoil is created when an employee knows that he or is being replaced,” said Jasensky, who also is a board member of the National Automotive Finance Association.

More workforce recommendations and current industry job listings can be found by going to Automotive Personnel’s website.

Q3 deep subprime originations sink to lowest level ever

COSTA MESA, Calif. - 

The evidence continues to mount showing how much auto finance companies are tightening their underwriting and slowing the volume of subprime paper they're adding to their portfolios.

Experian Automotive reported on Thursday that the number of consumers outside prime (with a credit score of 600 or below) notably decreased during the third quarter, hitting the lowest total finance market share on record since 2012. And the percentage of deep subprime originations sunk to a level never seen previously.

Analysts explained that Experian data shows the auto finance market continues to gain strength and stability. According to Experian’s latest State of the Automotive Finance Market report, prime consumers grabbed the lion’s share of the total finance market (40.9 percent), while super-prime buyers showed the largest increase, reaching 20.16 percent market share.

Melinda Zabritski, senior director of automotive finance for Experian, went so far as to refute again the industry naysayers who have predicted the bursting of the so-called auto finance subprime bubble for some time.

“For some time now, the story has been focused incorrectly on the rise in subprime lending. But the data over the last several quarters has shown that the entire market is growing, not just subprime,” Zabritski said. “The market turning more prime is an encouraging trend. It indicates that industry professionals are using data and analytics as part of the lending process, and consumers are taking a more active role in managing their credit before buying a car.”

The Q3 report also indicated that contract terms for new vehicles extended, and credit quality for obtaining financing for both new and used vehicles notably improved.

The average term for new-vehicle loans hit an all-time high of 69 months. While this statistic could trigger an alarm for some market watchers, Experian pointed out that its findings showed that buyers outside prime decreased by 4.3 percent, making up only 10.74 percent of the new-vehicle financing market.

Analysts also learned that prime and super-prime buyers shifted to used vehicles, growing to make up 49.83 percent of the used market. In comparison, the percent of buyers outside prime have decreased, making up only 31.34 percent of the market (only slightly above last quarter's record low).

Meanwhile, Experian also determined that deep-subprime consumers with a credit score of 500 or below obtaining used-vehicle financing dropped 9.2 percent to sink to an all-time low of 4.64 percent of the market.

“It’s clear that affordability is a driving force in a consumer’s decision to finance a vehicle, and the data shows that consumers are focused on doing what they need to do to reduce monthly payments and obtain the right vehicle that fits their needs, whether it’s buying new or used,” Zabritski said.

“By unlocking the potential of this market data, we can help consumers and the industry achieve more by empowering them to make better decisions,” she went on to say.

Past reports have shown that consumers often choose leasing to reduce monthly payments. But this quarter’s report showed a slight decrease in leasing across all risk categories, as more buyers shift to the financing market. The only exception was the super-prime category, which increased slightly (1.8 percent).

The average amount financed for new vehicles in the third quarter was $30,329, up $291 from Q3 2016. For used vehicles, the average amount financed reached $19,291, an increase of $56 over the previous year.

As for monthly payments? For new vehicles, the average payment was $502 per month, increasing by $6 over the previous year, while used-vehicle payments averaged $365 per month, up $3 from the previous year.

Other key findings from the Q3 2017 report included:

—The average credit score for financing a new vehicle (both installment contracts and leases) was 716.

—The average credit score for financing a used vehicle was 659 (620 for independent and 682 for franchise dealers).

—While average new-vehicle loan terms hit 69 months, the average term for used vehicle loans was 64 months.

—Total open automotive balances reached $1.121 trillion, up 6.8 percent from the previous year.

—The average new-vehicle lease payment was $412, up $6 from Q3 2016.

—The average financing interest rate was 5.1 percent for new vehicles and 8.7 percent for used vehicles.

—Credit unions and captive finance companies increased market share of total vehicle financing, growing to 21 percent and 29.8 percent — an increase of 6.9 percent and 35.1 percent, respectively.

—Banks lost market share of total vehicle financing, dropping 6.3 percent to reach 32.9 percent of the market.