Share of subprime borrowers in car loans, rental slips

Q1 2021 auto loan and lease statistics underscore the economic “K” recovery, where borrowers with high-risk credit scores drive a surge in demand, while borrowers with subprime credit are left behind for account.

Car originations to consumers with subprime loans fell to just 15% of the total in the first quarter. This is the lowest share of subprime issuance since the New York Federal Reserve began tracking in 1999, according to the New York Fed’s latest quarterly report on household debt and credit, released May 13.

Subprime issuance was $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.

In total, auto emissions rose 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 was a 17% share twice, during the Great Recession and immediately after, in Q4 2009 and Q3 2010.

The New York Fed defines subprime as credit ratings below 620. Originations include both loans and leases. The New York Fed does not break down originations by loans versus leases. But according to Experian Automotive, prime risk borrowers make up the overwhelming share of leases, and the vast majority of prime loans are loans.

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