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Should the auto industry be paying closer attention to SubPrime Leasing? Recent comments from KBB and Autotrader analysts said competition might be encouraging lenders to explore this profile further. But believes this is a segment that not only offers lower-than-expected risk, but one that could benefit from more leasing options.

According to Executive Vice President, Scot Hall:

  • The strength of the CPO market can absorb more lease activity
  • SubPrime leasing might help move more smaller cars, which aren’t selling as much because of low gas prices
  • Shorter-term payment structures of 36-months means SubPrime customers would have a smaller window for payment obligations before default risk
  • Leases having shorter terms relative to other financing options will permit subprime applicants to rebuild their credit more quickly and without the potential problems surrounding refinancing
  • Lease-heavy environments would benefit from customers who would most likely stick with the same brand
  • is seeing more customers in the 600s going through the lease application process

As noted recently in Auto Remarketing, “Experian Automotive mentioned in its latest report that leasing credit has loosened, as the average new-vehicle lessee had a credit score of 718 in Q1 2015, down from 721 the previous year.”

Views: 94

Tags: auto, car, credit, lease, swapalease, vehicle


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