SCHAUMBURG, Ill. — As average loan terms for a new vehicle
in the fourth quarter jumped to an all-time high, Experian Automotive also
discovered the amount of financing for deep subprime buyers climbed
significantly, too.

Experian said the average new-vehicle contract moved to
65 months, up from 63 months in Q4 of 2011. Average terms for used vehicles stayed
flat at 60 months, according to the company's Q4 State of the Automotive
Finance Market analysis.

In other findings Experian will delve into later today
during a quarterly webinar, analysts determined new-model financing for deep
subprime buyers — consumers with credit scores below 550 — soared 30.9 percent
higher year-over-year. On the used-vehicle side, the deep subprime increase
wasn't quite as much (6.5 percent) but still well more than all other credit
segments combined.

The report showed that the average loan amount for a new
vehicle was $26,691 in Q4, up $272 from the same period a year earlier. The
average used-vehicle loan was $17,629 in the fourth quarter, up $239
year-over-year.

However, while consumers are taking out larger loans, lower
interest rates and longer loan terms for new vehicles helped bring down the
average monthly payments.

For example, the average interest rate for a new vehicle
loan in the fourth quarter dropped to 4.36 percent from 4.52 percent a year
earlier. Meanwhile the average interest rate for a used-vehicle loan dropped to
8.48 percent from 8.67 percent.

Additionally, the average monthly payment for a new vehicle
dropped from $468 in Q4 2011 to $460 in Q4 2012.

As mentioned, Experian highlighted that more consumers also
were able to obtain financing in the fourth quarter as average credit scores
for both new and used vehicles dropped.

For new vehicle loans, the average consumer credit score was
755 in the fourth quarter, down six points year-over-year. For used vehicle
loans, the average consumer credit score dropped to 665, down five points from
Q4 of 2011.

In other findings from the fourth quarter report:

—Automotive loans for new vehicles with terms from 73 to 84
months increased by 19.4 percent over Q4 2011

—New lease share of new financing increased to 24.79
percent, up from 10.45 percent in Q4 2011

—The total subprime market for all new vehicle financing
increased by 9.7 percent to 24.77 percent, up from 22.59 percent in Q4 2011

—The total subprime market for all used vehicle financing
increased by 3.4 percent to 55.4 percent, up from 53.58 percent in Q4 2011

—Buy-here, pay-here stores and credit unions showed the
strongest market share growth of 4.3 percent and 3.9 percent for overall
automotive loans

—Banks have the highest market share of automotive loans at
41.2 percent

"Overall, Q4 2012 was a very favorable time for consumers to
buy a new or used vehicle in terms of overall monthly payments," said Melinda
Zabritski, director of automotive credit for Experian Automotive.

"Lower interest rates and longer loan terms made it easier
for consumers to finance a vehicle while keeping their payments affordable,"
Zabritski continued. "This, combined with the fact that more vehicle loans went
to consumers with credit outside of prime, portends a vital and healthy
automotive market."

Experian's quarterly credit trend analysis features market
reporting data and analysis from its AutoCount Risk Report, which analyzes
automotive lending markets based on a uniform measurement of credit quality
that segments markets by geography, credit score and vehicle registrations,
among other factors.

The analysis also incorporates data from the Experian-Oliver
Wyman Market Intelligence Reports, which provide topical, quarterly analysis,
peer benchmarking options and commentary on key issues facing the financial
services industry.

Editor's Note: Watch for more quarterly analysis from
Experian Automotive, including the rundown of top 20 lenders, in future
installments of SubPrime News Update.


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