ARLINGTON, Va. — In its annual report, which covers input from a variety of auto finance lenders, including several that work in the nonprime arena, the Consumer Bankers Association discovered that the average FICO score on a new vehicle has declined, while the average score on a used vehicle has increased.

Benchmark Consulting International compiled all the responses and was responsible for putting together the 2007 Automobile Finance Study, which was based on 2006 year-end results. Benchmark worked in cooperation with the CBA.

The first section of the report covered indirect auto finance. Reviewing the average FICO score for both new and used vehicles, officials found that the median score for a new vehicle has been decreasing over the years. In fact, it came in at 722 in 2006, compared with 727 in 2005, and 730 in 2004.

"The average FICO score on new vehicles was moderately down, while the average FICO score on used vehicles experienced a significant jump," executives reported.

On the used-vehicle side, the median score climbed to 712 from 658 in 2005, and 687 in 2004, according to the data.

The report also analyzed bureau score by applications, approvals and bookings. As for applications, the study revealed that the 720 range declined from 58 percent to 30 percent for 2006. Additionally, the less than 600 score range hit 17 percent in 2006, compared with just 2 percent.

In a breakdown of other ranges, the report found that applications in the 680 to 719 range were 18 percent, while those in the 650 to 679 range were 14 percent. Moreover, 11 percent of applications fell into the 620 to 649 range, and 6 percent were in the 600 to 619 range. Only 3 percent of applications did not receive a score, according to officials.

Of the 17 percent of applications that fell into the less than 600 range, only 6 percent received approval. When it came to booking, 6 percent of consumers in the 600 range booked a loan.

"Approval to application rate within the non-scored range increased from 15 percent to 30 percent," executives said. "Bookings to approvals within the less than 600 range decreased from 67 percent to 59 percent. Bookings to applications within the more than 720 range decreased from 68 percent to 54 percent."

Continuing on, Benchmark and CBA found that combined portfolio dollars for both new and used vehicles were down 7 percent from the previous year. Moreover, large class respondents, characterized as greater than 40,000 portfolio units, noted a 15-percent decline in dollars from the 2006 study.

Furthermore, officials said the average new vehicle loan amount was down by about $200 to $23,300 from 2006, while the median used vehicle loan grew 4 percent to about $17,000.

Looking at average amount financed for new vehicles as a percent of invoice, the report indicated that this number increased to 99 percent from 95 percent in the previous year.

As many would suspect, the report also revealed that maturity levels for both new and used vehicles are lengthening.

"New-vehicle loans over 60 months accounted for nearly 60 percent or originations. Used-vehicle loans over 60 months accounted for nearly 50 percent of originations," executives explained. "Average new-loan maturities continue to trend upward for loans over 60 months. Average maximum maturities increased among all categories since last year's study."

In a slight increase from last year, 75 percent of lenders reported that their average loan processing time was less than 30 minutes, compared with 72 percent in 2006 and 62 percent in 2005.

E-contracting also gained ground since the last study. According to officials, 14 percent of lender participants reported they use some form of e-contracting, compared with 8 percent the previous year.

Reporting on credit performance, the executives discovered that the account delinquency rate for used units was up 4 percent on a year-over-year basis. Additionally, the dollar delinquency rate increased 18 percent on used vehicles.

"Captive account delinquency rate (for used vehicles) was still higher than that of large banks, but was the lowest in the past three study periods — down 23 percent since last year," executives pointed out.

Moreover, officials noted, "Dollar delinquency on used vehicles increased among both the medium and large class sizes — medium class up 25 percent, and large class up 28 percent.

The data showed that gross charge-off rates continued their trend of increases, up 7 percent since the previous report. For the 2007 report, the average gross charge-off rate for both new and used units was 1.27 percent, compared with 1.19 percent in 2005 and 0.98 percent in 2004.

On the other hand, executives found that net charge-off rates lessened back to their 2004 level. More specifically, the median net charge-off rate for 2007 was 0.70 percent, equal to the number reported in 2004, but lower than 0.77 percent reported in 2005.

"Charge-offs attributed to bankruptcy dropped off since the last study," executives said. "Last year's reported spike may have been the result of changing bankruptcy laws."

Discussing bankruptcies challenged and reaffirmed, officials discovered that reaffirmations increased 55 percent, the highest in eight years. Moreover, 56 percent more bankruptcies were challenged.

For more information on the report, including data on wholesale, floor plan auto finance and indirect auto leasing, contact Richard Caponetti, research manager with the CBA, at (703) 276-3880. Association information can also be found at

Editor's Note: More information on this report, including a list of participants, graphs and other details, will be available in the Early July edition of SubPrime Auto Finance News.