Looking under the Hood of the Subprime Auto Lending Market
Research by the New York Fed gives new details on the growth of subprime auto lending. Since the market hit bottom in Q4 2009, balances have risen for the auto loan industry as a whole. But the growth has been most pronounced among the riskier borrowers, who also experienced the most severe contraction during the crisis. The dollar value of originations to people with credit scores below 660 has roughly doubled since 2009, while originations for the other credit score groups increased by only about half, owing primarily to an increase in the average size of the loans. The bulk of the subprime auto lending growth has occurred among auto finance companies, while growth has been more modest at banks and credit unions.