SCHAUMBURG, Ill. — Loans to deep subprime buyers jumped in
the first quarter. So did 30-day and 60-day delinquencies as well as
repossessions.

The latest State of Automotive Finance report from Experian
Automotive showed that 30-day auto loan delinquencies rose 1.3 percent, 60-day
delinquencies increased 12.4 percent and repossessions rose 16.9 percent when
compared with the previous year.

Meanwhile, Experian also discovered that vehicle loans to deep
subprime buyers — consumers with credit scores of 550 and lower — rose by 3.45
percent year-over-year. The firm's data showed financing to prime borrowers
jumped, too, but by a smaller rate at 2.56 percent.

But on the opposite end of deep subprime, financing to
superprime buyers — individuals with sterling credit scores of 740 or higher —
actually fell off by 3.14 percent year-over-year during Q1.

All told, Experian indicated that among all open auto loans
in the first quarter, 35.4 percent fell outside of the prime space.

With more financing going to people with shakier credit
histories, Melinda Zabritski, Experian's senior director of automotive credit,
wasn't surprised to see delinquency metrics rise during Q1.

"Obviously, we never want to see a rise in delinquencies or
repossessions, but when you compare the current findings with previous years,
they are still lower than the recession-level rates," Zabritski said.

"As we continue to move forward, we should start to see more
increases as some of the subprime loans coming onto the books begin to
deteriorate," she continued. "However, one thing most lenders will agree upon
is that today's subprime borrower is less delinquent than those in the past."

Findings from the report also showed that automotive
repossessions jumped 16.9 percent, going from 0.43 percent in Q1 of last year
to 0.50 percent in the first quarter of this year.

While repossession rates for banks, captives and credit
unions are all down year over year by as much as 14.9 percent, rates for
finance companies — operations that don't carry customer deposits such as
Credit Acceptance or Santander Consumer USA – increased by 52.1 percent.

In spite of the increase, Experian described overall
repossession rates as still relatively low when compared with the peak rate of
0.71 percent in Q1 of 2010.

In other report findings:

—Total dollar volume of automotive loans grew by 9.6 percent
in Q1, reaching $726 billion, compared with $663 billion in Q1 of last year.

—Banks increased loan portfolios by $20 billion, finance
companies by $18 billion, credit unions by $14 billion and captive finance
companies by $12 billion

—Average charge-off amounts for defaulted loans were up from
$6,739 in Q1 2012 to $7,401 in Q1 of this year.

—Charge-offs are still well below recession levels, however,
as Q1 2009 average charge-offs were $10,126.

Experian Automotive's quarterly State of Automotive Finance
report features market data and analysis from its AutoCount Risk Report, as
well as data from IntelliView that is sourced from the Experian-Oliver Wyman
Market Intelligence Reports.

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