The automotive finance market favored customers in higher credit tiers in the months leading up to the coronavirus outbreak in the U.S., credit bureau Experian said Tuesday in its latest State of the Automotive Finance Market report.
Subprime market share shrank in the first quarter as loan amounts hit record highs, an indication that credit markets were tightening before the pandemic.
Lenders are now moving to stem losses from potential delinquencies related to COVID-19 and tighter credit and lending rules could force more buyers out of the market.
Melinda Zabritski, Experian's senior director of automotive financial solutions, said a slightly tighter auto finance market and affordability concerns continued in the first quarter, with customers who have credit scores above 660 making up a larger portion of the new- and used-vehicle market.
The share of subprime loans tumbled to historic lows, making up less than 23 percent of total auto loans in the first quarter, according to Experian. The average credit score for a new-car buyer reached 721, and the average credit score for used-car buyers also rose incrementally, to 660.
Affordability remained a major factor influencing buying decisions, Experian said, as the average monthly auto payment reached a record high in the first quarter of $569. Loan amounts for new vehicles hit a record high of $33,739.