ATLANTA—Auto loan originations, leasing and new subprime loans are all down year over year through February, according to Equifax.
The data confirms what auto industry analysts have been stating, that 2018 will see a decline in overall auto sales.
The company reported that 3.58 million auto loans, totaling $80.3 billion, have been originated year-to-date.
“This is a 3.0% decrease in accounts and a 1.4% decline in balances from this time last year,” Equifax said.
"We continue to see a slight pullback in originations at the onset of 2018 compared with the previous few years, signaling that this year may see slightly less sales for autos," said Gunnar Blix, Deputy Chief Economist for Equifax. "We're also looking at credit source trends, which show that an increasing share of subprime accounts are being originated at the independent dealer level."
Credit Quality
Equifax reported that 819,600 auto loans have been originated through February to consumers with a VantageScore 3.0 credit score below 620.
“These are generally considered subprime accounts. This is an 8.4% decrease from February 2017. These newly-issued loans have a corresponding total balance of $14.4 billion, an 8.5% decrease year-over-year,” Equifax said.
Through February, 22.9% of auto loans were issued to consumers with a subprime credit score, and they accounted for 17.9% of origination balances. In the first two months of 2017, the account share was 24.3% and balance share was 19.3%.
The average origination loan amount for all auto loans issued in February 2018 was $22,440.
“This is a 2.7% increase over February 2017. The average subprime loan amount was $17,533. This a 1.3% increase compared to February 2017,” the company said.
Auto Lease Originations
Equifax reported that 513,950 auto leases, totaling $8.45 billion, were originated through February.
“This is a 16.8% decrease in accounts and a 17.2% decrease in balances, from this time last year. Auto leases accounted for 12.6% of all auto accounts originated through February, and 9.5% of balances,” the company said.
Equifax noted that 52,900 auto leases have been originated through February to consumers with a VantageScore 3.0 credit score below 620.
“These are generally considered subprime accounts. This is a 12.0% decrease from February 2017. These newly issued leases have a corresponding total balance of $911.7 million, an 11.8% decrease year-over-year,” the company said.
Through February, 10.3% of auto leases were issued to consumers with a subprime credit score. In 2017 through February the share was 9.7%. The average origination balance for all auto leases issued in February 2018 was $16,678.
“This is a 0.4% increase over February 2017. The average subprime lease amount was $17,259, a 0.1% increase over a year ago. Note that lease origination values reflect the contract amounts only and exclude expected vehicle residual values,” Equifax said.