Share of at-risk borrowers in car loans and rental slips

The statistics on auto loans and leasing in the first quarter of 2021 highlight the economic recovery in ‘K’, where borrowers with high risk credit scores lead to a sharp increase in demand, while borrowers with subprime loans are left behind.

Auto creations to consumers with subprime loans fell to just 15% of the total in the first quarter. According to the New York Fed’s latest quarterly household debt and credit report, released May 13.

Subprime creations totaled $ 23.3 billion in the first quarter, down 18% from a year ago. The New York Fed report is based on national statistics, not just New York’s.

In total, auto creations were up 1.6% for the quarter from a year ago, to $ 152.7 billion, the New York Fed said.

The last time the subprime share was nearly this low, it was 17% twice, during the Great Recession and its immediate aftermath, in the fourth quarter of 2009 and the third quarter of 2010.

The New York Fed defines subprime as credit scores below 620. The origins include both loans and leases. The New York Fed does not break origins with loans versus leases. But according to Experian Automotive, high-risk borrowers account for the overwhelming share of leases, and the vast majority of subprime grants are loans.

Conversely, in the first quarter of 2021, the New York Fed reports loans and leases for borrowers in the highest level of principal risk credit ratings, 760 and above, increased by 5.5 % compared to a year ago and accounted for the largest share of initiations at 36.6%, compared to 35.3% a year ago.

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