The share of auto loans rated subprime hit a first-quarter 10-year low and the average credit score rose as lenders adjusted their financing criteria, according to Experian's first-quarter State of the Automotive Finance Market report.
The total share of subprime and deep subprime loans fell to 24.1 percent in the first quarter, compared with 26.5 percent a year earlier. The 30-day delinquency rate on new vehicles fell to 1.96 percent from 2.1 percent a year earlier.
The recession changed the industry, and because Experian starting tracking automotive data just before the recession, it doesn't have a long enough trend line to see a market cycle, said Melinda Zabritski, senior director of automotive. But she said this seems like a market rebound.
"We will likely risk appetite increase again, but typically when they dip into subprime, it tends to be the upper range of subprime," she said. For now, though, the average credit score on a new-vehicle loan was 717 in the quarter, a 5-point rise. For used vehicles, it was 652, a 7-point rise and likely a reflection of more prime borrowers entering the used-vehicle market.