FINANCE & INSURANCE

Wachovia is top subprime auto lender

Melinda Zabritski: Many lenders that stayed in the subprime auto loan market saw higher share even if their high-risk loan volume dropped.
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Wachovia Dealer Services is the nation's top lender for car buyers with fair or poor credit profiles, Experian Automotive reports.

Capital One Auto Finance ranks second, closely followed by Toyota Financial Services in third place. Chase Auto Finance ranks fourth, and GMAC Financial Services and Ford Motor Credit Co. are tied for fifth place.

The Experian study of the nonprime and subprime auto finance segments -- which encompass credit scores of 550 to 679 -- marks the first time the research company has ranked auto lenders on the financing they extend to customers with substandard credit. Experian collected the data in the third quarter of 2009.

Some results are surprising: For example, Toyota Financial Services ranks high despite its historic focus on customers with good and excellent credit.

Wachovia's top rank is less of a surprise because the Experian data show it also ranks first in used-vehicle financing, which draws a larger share of customers with risky credit.

Biggest risk-takers
The nation's highest-volume subprime and nonprime auto lenders based on market share for the 3rd quarter of 2009
1. Wachovia Dealer Services6.90%
2. Capital One Auto Finance5.70%
3. Toyota Financial Services5.60%
4. Chase Auto Finance5.50%
5. GMAC Financial Services3.70%
5. Ford Motor Credit3.70%
7. American Honda Finance2.90%
8. Nissan Infiniti Financial Services2.10%
9. CitiFinancial1.50%
10. Credit Acceptance Corp.1.20%
Source: Experian Automotive

Market share for some of the lenders was artificially inflated when many lenders left the subprime and nonprime finance business last year, says Melinda Zabritski, Experian's director of automotive credit. The market was divvied up between fewer players, she says.

"For many of these top lenders, we've seen a big gain in market share, but they have decreased their overall distribution," Zabritski says. "The exception is Capital One, which has gained significantly in this space."

Capital One Auto Finance boosted subprime and nonprime business to nearly two-thirds of its overall loan portfolio, the data show.

By contrast, in the third quarter, the nonprime and subprime segments represented 29 percent of Wachovia's auto loan portfolio, down from 47 percent in the third quarter of 2008. Wachovia's market share among subprime lenders was 1.7 percent in 2008, but it ranked No. 1 in 2009 with a 6.9 percent share of that business.

Toyota Financial Services, Chase Auto Finance and GMAC Financial Services also increased their share of the subprime market while reducing their volume in the higher-risk loan segments.

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