NEW YORK - Moody's Investors Service said it has created the first index measuring the performance of subprime loans. Although that might be good news to investors, the index could be a blow to subprime lending. The index shows marked deterioration in credit quality since 1995, the base year. The Moody's Subprime Auto Market Index, a measure based on subprime loan write-offs relative to a 'basket' of more conventional loans, has risen to 110.77 points - up from 70.66 in April 1996 and 44.79 in January 1995. The higher the number, the greater the risk. 'The current failures in the subprime market are a reflection of the influx of lenders that weren't prepared to qualify or monitor the loans,' said Dave Robertson, executive director of the Association of Finance and Insurance Professionals in Bedford, Texas. The industry's overall performance should improve in the next few years because many lenders have tightened credit standards, he said.
LOS ANGELES - Auto-By-Tel, an Internet buying service, is signing agreements with auto lenders to provide an online financing program for its customers. Auto-By-Tel Acceptance Corp., which started this month, lets car shoppers apply for and obtain credit within minutes. Chase Manhattan Bank of Garden City, N.Y., is the first lender to join the program. Auto-By-Tel, based in Irvine, Calif., also is negotiating with two more lenders, said spokeswoman Cassandra Cavanah. It plans to launch an auto leasing program through GE Capital Auto Financial Services of Barrington, Ill., in July, she said. Auto-By-Tel's Web site has a link to Bank Rate Monitor, which tracks interest rates by financial institution and geographic region. The link will let shoppers compare Auto-By-Tel's finance rates with rates of other banks.
McLEAN, Va. - Inflated residual values induced dealers to return more off-lease vehicles in 1996 than they did in 1995, according to the National Automobile Dealers Association. NADA said dealers returned 45 percent of off-lease vehicles in 1996, compared with 34 percent in 1995. In some cases, lease-end values exceeded what dealers could ask for the cars at retail, NADA said. The percentage of customers who purchased their vehicles when their leases expired has been constant - about 25 percent, NADA said.