The latest data made available by Equifax reinforced patterns many finance companies might be experiencing. Origination volume is slowing, while the amount financed is climbing.
According to Equifax data through March, the auto-finance industry generated 5.90 million auto loans, totaling $135.5 billion. Analysts indicated the metrics represent a 1.0% decrease in accounts and a 1.3% increase in balances compared to the same span a year ago.
Equifax pointed out retail installment sales contracts constituted 86.6% of all originations and 89.8% of auto origination balances through the first quarter.
Analysts determined 1.39 million auto loans have been originated to consumers with a VantageScore 3.0 credit score below 620. Equifax reiterated these contracts are generally considered subprime accounts. The credit bureau found that subprime origination level marked a 1.0% decrease from March 2018.
However, Equifax noted these newly issued subprime contracts have a corresponding total balance of $25.5 billion, a 2.4% increase year-over-year.
Through March, Equifax also mentioned 23.5% of auto loans were issued to consumers with a subprime credit score, and they accounted for 18.8% of origination balances. Through the first quarter of last year, the account share was 23.5% and balance share was 18.6%.
Equifax went on to note the average origination amount for all financed deals through March came in at $23,182, representing a 3.1% increase year-over-year
In the subprime space, the average amount financed was $18,552, marking a 3.6% rise from a year ago.
Vehicle lease data
Equifax also shared its latest data about vehicle leases through March of this year.
Analysts tallied up 914,300 vehicle leases, totaling $15.4 billion, through March. The figures marked a 3.1% decrease in accounts and a 0.5% increase in balances from a year ago.
Equifax found vehicle leases accounted for 13.4% of all accounts originated through March and 10.2% of balances.
Analysts added 85,660 vehicle leases were originated to consumers with a VantageScore 3.0 credit score below 620, that’s a 5.4% decrease year-over-year.
Those newly issued leases to subprime consumers have a corresponding total balance of $1.53 billion, a 1.6% decrease year-over-year, according to Equifax.
Through March, Equifax also said 9.4% of auto lease accounts and 9.9% of total balances were issued to consumers with a subprime credit score.
Analysts wrapped up their report by noting the average origination balance for all vehicle leases issued through March came in at $16,710, representing a 2.7% increase from the same juncture last year. The average subprime lease amount was $17,712, a 2.9% increase above a year ago.
Equifax emphasized that lease origination values reflect the contract amounts only and exclude expected vehicle residual values.
Equifax closed its latest auto-finance update with general observations from Jennifer Reid, the company’s vice president of automotive marketing and strategy
“We’re certainly keeping a close eye on credit trends as they relate to originations and balances for both financed and lease environments as we move through 2019,” Reid said.
“The lower percentage increase in balances for loans and leases at the end of March indicates that dealers and lenders continue to need advanced data to help them stay ahead of the competition by deciphering key consumer and market trends driving a change in vehicle affordability patterns to arrive at the right price and loan balance,” Reid went on to say.