According to credit bureau Experian, nearly 84% of people who borrowed to buy a new car last quarter had prime or above-prime credit scores.
Experian splits borrowers into five categories based on their credit scores:
- Super Prime: 781-859
- Prime: 661-780
- Near Prime: 601-660
- Subprime: 501-600
- Deep Subprime: 300-500
Experian reports that 46.01% of new car loan borrowers had Super Prime credit scores last quarter—the highest figure in at least five years. Another 37.86% had Prime scores.
Meanwhile, Subprime and Deep Subprime borrowers made up just 5.22% of the market.
Related: Fed Keeps Interest Rates Flat, Offering Car Shoppers No Help
Subprime and Deep Subprime loans made up nearly a quarter of the market as recently as 2018.
Increasingly, shoppers with lower credit scores have nowhere to go. Things weren’t much better for them in the used car market. Prime and Super Prime borrowers comprised 58.89% of those who qualified for used car loans last quarter.
Subprime and Deep Subprime borrowers made up 22.44% of used car loan originations, a 5-year-low.
Related: Long Improving, New Car Affordability Worsened in April
In recent years, automakers have tailored their lineups toward wealthier, better-credit buyers. The number of cars available under $25,000 has crashed, while the number of models priced over $60,000 has increased more than 160% in five years.
That has dealers in a crunch, increasingly pressuring automakers to produce more models for the affordable car market.
