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FINANCE

3 Credit Bureaus Rebut Subprime ‘Bubble’

Talk Again to Open AFSA Event

BY NICK ZULOVICH, SENIOR EDITOR, SUBPRIME NEWS

In front of a standing-room only audience ulate while circling back to the mortgage the advent of alternative credit data that can
at the Sheraton New Orleans, a trio of ex- meltdown that derailed the economy. present a more detailed background about
perts from each of the three major credit a consumer’s past performance.
bureaus to varying degrees all emphasized “People don’t buy cars to flip them. They
that there is no bubble, and the amount of buy them to get to work,” Crews Cutts However, each credit bureau shared some
subprime auto paper still outstanding is said. “There’s definitely not a bubble.” concerns about subprime auto finance.
actually less than where it stood before the Laky mentioned that terms stretched to 75
Great Recession. Later Laky added, “It’s such a different part months are fine, if the consumer actually
of the economy than mortgage.” And when has the budget capacity to maintain the
AFSA gathered together Equifax chief speaking about subprime auto paper being payment commitments.
economist Amy Crews Cutts, Experian booked nowadays, Laky said, “We’re still
senior director of automotive finance Me- not even up to where we were back in 2009.” Zabritski noted that loan-to-value ratios of-
linda Zabritski and Jason Laky — who ten are at 110 percent and higher, even when
is senior vice president and automotive Zabritski also chimed in, saying, “We had a buyer makes a 10-percent down payment.
and consumer lending business leader at this massive trough in 2009 where there That’s because of all of the taxes, fees and
TransUnion — for a session ahead of the wasn’t any funds to lend. We’re seeing the other ancillary costs that go into delivery.
main festivities at the conference that be- market turn around with higher scores in
gan later. longer term loans.” Crews Cutts pointed out how it’s import-
ant to watch trend data about payment
Each of the experts took turns dissecting The 45-minute session moved quickly as performance of subprime borrowers with
various parts of the subprime auto finance the assembled panel touched on elements regard to all of their monthly commitments
market, maintaining that it’s not “bub- of the subprime space that are now different because sometimes their ability to handle
bling” like some media outlets might spec- than perhaps 10 years ago, especially with their finances can produce a “train wreck.” n

60 | GIADA Independent Auto Dealer FEBRUARY 2017