A record number of auto loan originations can be linked to the work credit unions and other auto lenders are doing behind the scenes.
That’s according to Equifax’s National Credit Trends Report released Wednesday.
“It’s clear as we analyze the auto finance segment that auto lenders are doing a great job in accessing risk, managing their portfolios, and making credit available to customers who need transportation to get to work or simply want to enjoy some of the great new models that manufacturers are producing,” said Lou Loquasto, Equifax auto finance vertical leader.
He added, “The industry's ever-growing sophistication in using credit and non-credit data to aid decision-making is one of the key reasons for the health of this segment.”
Still, the biggest challenge that Equifax is hearing in the market today is shrinking yields, as more lenders look to auto finance as a source of quality receivables, Loquasto pointed out.
Equifax said the automobile lending sector continues to thrive. From January to October 2013, the total number of new auto loans originated was 20.2 million, totaling $405.2 billion and representing the highest origination total for that time in eight years.
Loans funded by banks, savings and loans and credit unions are currently at $417.2 billion, according to Equifax. Similarly, the total outstanding balance for loans funded by auto finance companies is $442.5 billion.
“Auto delinquencies have declined to levels last seen in mid-2006, and the strength in the performance of loans booked in the last few years is helping to make credit more widely available to those with higher-risk credit profiles, namely subprime borrowers,” said Equifax Chief Economist Amy Crews Cutts.
The choices consumers are making with the types of cars they are buying have changed in the aftermath of the Great Recession, with a heavy emphasis on value for the dollar, Crews Cutts said. Demand for new cars is rising, but the mix is now shifted towards economically and environmentally friendly features, she noted.