Accessible Version
Subprime Auto Lending: Trends in Buy Here Pay Here Auto Lending, Accessible Data
Figure 1. BHPH Auto Dealer Loan Balances by Credit Rating Group
Figure 1 is a stacked area time series chart spanning from 2018 Q1 through 2025 Q3, that shows outstanding BHPH auto dealer loan balances as a stacked area chart by broad credit rating group. The credit rating groups are created using the Equifax Risk Score in the CCP and are displayed as different colors, which stack up to equal the total balances. The super prime group is on top in dark blue, followed by prime in green, near prime in light blue, subprime in purple, and deep subprime at the bottom in red.
The chart shows that:
- Total BHPH auto dealer loan balances have grown from approximately $10 billion in 2018 Q1 to approximately $32 billion in 2025 Q3.
- Total loan volume for all credit rating groups have grown since 2018 Q1.
- The share of deep subprime balances decreased over this period from 70% of total loan volume in 2018 to around 50% in 2025 Q3.
Note: Credit rating groups are defined as super prime if the reported Equifax Risk Score is >= 720, prime if >=660 and <720, near prime if >=620 and <660, subprime if >=580 and <620, and deep subprime if <580. Total balances for all loans reported in a given quarter are shown. Key identifies in order from top to bottom.
Source: New York Fed Consumer Credit Panel/Equifax
Figure 2. Q3:2025 Snapshot of Auto Loan Performance by Lender Type
Figure 2 consists of a grouped bar chart that compares 3 performance metrics between loans from BHPH auto dealers and traditional auto lenders in 2025 Q3. The 3 metrics are percentage of balances 30+ days past due in blue, the percentage of balances 90+ days past due or charged off in orange, and percentage of balances repossessed in purple. The BHPH auto dealer metrics are grouped together on the left side of the figure and the traditional auto lender metrics are grouped together on the right.
The chart shows that:
- The percentage of balances that are delinquent, in default or charged off, and with active repossession status, as represented by the bars, were all higher for loans from BHPH auto dealers than from traditional auto lenders.
- Delinquency and default rates for BHPH auto dealers were 2.65 and 1.88 times higher than those of loans from traditional auto lenders.
- As seen by the purple bars, loans in active repossession status were 16.63 times higher for loans from BHPH auto dealers as compared to traditional auto lenders.
Note: Loan status and balances are taken as of Q3 2025. Loan balances reported as more than 30 days through 120 days past due are in the 30+ dpd group. Loan balances reported as more than 90 days through 120 days past due or as charged off are in the 90+ dpd group. Loan balances reported as repossessed are in the repossessed group. Key identifies in order from left to right.
Source: New York Fed Consumer Credit Panel/Equifax
Figure 3. Buy-Here-Pay-Here and Other Dealers: Bank Internal-Rating-Implied PDs and LGDs
Figure 3 consists of a grouped bar chart that compares bank-reported probability of default and loss given default for corporate loans to Buy-Here-Pay-Here borrowers and all other auto dealers. The bar chart compares probability of default and loss given default in three distinct time periods: 2020:Q2 to 2021:Q4, 2022:Q1 to 2024:Q2 and 2024:Q3 to 2025Q3. For each time period, bank-reported probability of default of Buy-Here-Pay-Here borrowers are shown in dark blue, probability of default of all other dealers are shown in orange, loss given default of Buy-Here-Pay-Here borrowers are shown in green and loss given default of all other borrowers are shown in light blue.
The chart shows that:
- In the 2020:Q2 to 2021:Q4 period, the loss given default of Buy Here Pay Here borrowers is about 11%, while the loss given default of all other dealers is significantly higher at just over 16%. For the 2024:Q3 to 2025:Q3 period, the loss given default for both Buy-Here Pay-Here and all other dealers were roughly equivalent at around 15%.
- The bank-reported probability of default of Buy-Here Pay-Here borrowers is slightly lower than the probability of default of all other auto dealers in each of the three time periods. There is a notable increase in the probability of default of both Buy-Here Pay-Here borrowers and all other dealers when moving from the 2022:Q1 to 2024:Q2 time period to the 2024:Q3 to 2025:Q3 time period.
Note: Both the probability of default and loss given default are calculated as averages across corporate loan borrowers and represented in percentage terms. The Buy-Here Pay-Here sample is constructed by name-matching borrower names to industry-known Buy-Here Pay-Here auto dealers. The sample of all other auto dealers includes any borrower that received a dealer floor plan financing loan at least once in the data and have industry NAICS codes of 441110 “New Car Dealers”, 441120 “Used Car Dealers”, 441210 “Recreational Vehicle Dealers”, 522220 “Sales Financing”, 522291 “Consumer Lending”, 525990 “Other Financial Vehicles”, 532112 “Passenger Car Leasing”, and excludes the identified Buy-Here Pay-Here dealers. The sample period is Q2:2020 –Q3:2025. Key identifies in order from left to right.
Source: FR Y-14Q Schedule H.1