8 Facts About Nonprime That You Need to Know

The fact that nonprime loan portfolios increased last year, delinquency rates grew at a faster clip are not the only facts you need to know about nonprime lending.

To better understand the market, we offer these eight market facts to shed additional light on what’s happening in this ever-changing corner of the auto finance business:

  1. The average number of accounts per portfolio ticked up 5% last year to 58,326, from 55,559 in 2012.
  2. The average amount financed on new cars was $26,943; on used cars it was $16,233.
  3. On new-car loans, the average credit score was 614, the average term was 70 months, the average loan-to-value ratio was 126%, and the average interest rate was 8.11%. On used-car loans, the respective data points were: 596 credit score, 60 months, 141% LTV, and 12.96% interest.
  4. Respondents purchased contracts, on average, at 92.7% of face value in 2013, compared with 92.2% in 2012. In other words, discounts fell to 7.3% from 7.8%.
  5. The average cost to process an application was $16, while the average cost to fund a contract was $87.
  6. Profits fell 14% to 5.2% in 2013, while the average cost of funds remained unchanged at 3.8%.
  7. Only 14% of survey participants employed e-contracting last year.
  8. Aside from telephone communications, 65% of survey participants serviced accounts via text messaging, up from 50% in 2012.

Source: 2014 Non-Prime Auto Financing Survey, National Automotive Finance Association

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