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Auto lending naysayers are neglecting key facts

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In 2014, auto lending has received increased media attention. Unlike other forms of consumer lending, auto lending has been booming. This lending has powered spending and has been an important driver of the economic recovery. In order to examine auto lease and loan trends. These slides highlight Experian IntelliView data tthat provides a quarterly update of U.S. lending trends based on credit bureau data including originations, outstanding loans and lines, credit performance trends, segmented by product and other characteristics.

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Auto lending naysayers are neglecting key facts

  1. 1. Auto Lending Naysayers Are Neglecting Key Facts Jerry Podczaski, Global Consulting Practice, Experian Decision Analytics ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
  2. 2. Figure 1: Consumer Credit Product Volumes Since 2006 – Experian Intelliview Data 180 160 140 120 100 80 60 40 20 0 Index, 2006 Q1 =100 Figure 1 Consumer Credit Product Volumes Since 2006 HELOCs Quarter Auto Loans and Leases Mortgages Personal Loans Home Equity Loans Bankcards 2 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  3. 3. Figure 2: Auto Loan and Lease Volumes by Financial Institution Type - Experian Intelliview Data Auto Loan and Lease Volumes By Financial Institution Type $160 $140 $120 $100 $80 $60 $40 $20 $0 Quarterly Volume in $billions Figure 2 All Auto Loans and Leases Captive Auto Banks Credit Unions Quarter Finance Companies 3 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  4. 4. 4 Experian-Oliver Wyman Market Intelligence Report VantageScore Overview VantageScore Credit Tiers Super prime 781-850 Prime 661-780 Near prime 601-660 Subprime 500-600 Deep subprime 300-499 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. VantageScore®, which is used by lenders and now available to consumers, is the first credit score developed cooperatively by Experian and the other national credit reporting companies. The VantageScore 3.0 model ranges from 300 - 850 with a high score = low risk. Note: Each lender determines credit quality tiers according to their own lending strategies. The credit tier breakdown is offered only as an approximation. VantageScore is a registered trademark of VantageScore Solutions, LLC.
  5. 5. Figure 4: Auto Loan and Lease Volumes by Credit Grade– Experian Intelliview Data $60 $50 $40 $30 $20 $10 $0 Quarterly Originations (in $billions) Figure 4 Auto Loan and Lease Volumes By Credit Grade Super-prime Quarter Near-prime Prime Subprime Deep Subprime 5 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  6. 6. Figure 5: Auto Loan and Lease Volumes by Credit Grade 2014 Q2 – Experian Intelliview Data 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Figure 5 Auto Loan and Lease Volumes By Credit Grade 2014-Q2 3.50% 2.71% Super-prime Prime 5.71% Near-prime 8.43% Subprime Deep Subprime 4.11% 6.90% 11.69% 13.81% 9.29% 2.78 3.68% 5.95% 9.32% Existing APRs Above Column 5.27% 3.23% 11.15% 18.20% 12.17% Banks Captive Auto Credit Union Finance Proportion of Origination Volume 3.04% 19.78% 6 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  7. 7. Figure 6: Auto Loan and Lease Average Size by Financial Institution – Experian Intelliview Data $25,000 $20,000 $15,000 $10,000 $5,000 $0 All Auto Loans and Leases Quarter Banks Finance Companies Captive Auto Credit Unions 7 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  8. 8. Figure 7: Auto Loan and Lease APRs by Credit Grade – Experian Intelliview Data 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% APR Figure 7 Auto Loan and Lease APRs By Credit Grade Quarter Deep Subprime Subprime Near-prime Prime Super-prime 8 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  9. 9. Figure 8: Auto Loan and Lease Volumes 2014 Q2 by State – Experian Intelliview Data Auto Loan and Lease Volumes 2014 Q2 By State TX 11.8% CA 10.9% FL 6.7% NY 5.0% PA 3.8% IL OH 3.7% 3.5% GA 3.3% Figure 8 MI 3.1% NC 2.9% All Else 35.7% VA 2.7% NJ 2.6% MD 2.0% AZ 2.2% 9 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  10. 10. 10 Experian-Oliver Wyman Market Intelligence Report IntelliView Stay ahead of the trends with Experian IntelliView  A unique combination of industry leading assets from Experian and Oliver Wyman  Current Experian – Oliver Wyman Market Intelligence Reports in an online format – Hundreds of pre-defined reports – Create custom reports and views using intuitive prompts – Download instantly to PDF or MS Excel  24 x 7 access to timely and invaluable information given current economic and credit volatility  Automatic quarterly updates  Wide range of consumer lending products  Origination, outstanding loans and credit performance trends  Industry benchmarking ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  11. 11. Jerry Podczaski Senior Business Consultant Experian Decision Analytics’ Global Consulting Practice Jerry Podczaski brings a formidable record of U.S. and international consulting successes within the financial services industry to Experian. Podczaski has been a management consultant in the financial services industry for the past eight years. Prior to that, he spent seventeen years in executive roles at large financial service companies such as Wells Fargo and Nations Bank. His area of expertise is credit risk management. Jerry Podczaski has unique experience, with an understanding of every major consumer lending product (mortgages, home equity lending, credit cards, auto lending), as well as small business lending. He brings deep, rich expertise in optimizing credit and risk infrastructure, incorporating methodologies, policies, controls, compliance, systems, people, and processes. Podczaski is a respected leader and mentor with superior skills in change management. An accomplished SAS programmer, Podczaski’s skill provides the ability for data analytics that compliments his long experience. “Working with a client and building an understanding of their business and circumstances excites me. I enjoy creating relationships that prevail. 11 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
  12. 12. ©2012 2014 Experian Information Solutions, Inc. All rights reserved. 12 Experian Public. Discover how an Experian business consultant can help you strengthen your credit and risk management strategies and processes: http://ex.pn/DA_GCP

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