KBRA Releases Research – Auto Loan ABS Origination Attributes: Navigating the Next Stretch of the Road

NEW YORK--(BUSINESS WIRE)--KBRA releases research examining trends in key auto loan ABS origination metrics—including loan-to-value (LTV), payment-to-income (PTI), annual percentage rate (APR), and original term—to assess how underwriting standards have evolved across originators and borrower credit segments over time. Auto loan ABS credit performance has softened in recent years (see U.S. Auto Loan ABS Indices) as borrowers navigate higher interest rates, persistent inflationary pressures, and elevated vehicle prices. At the same time, the post-pandemic rebound in origination volumes may have coincided with some easing in select underwriting metrics among certain lenders.

Key Takeaways

• Prime LTVs and PTIs have remained broadly stable, with structural differences across originators. Since 2023, prime weighted average (WA) LTVs have hovered around 90%, while WA PTIs have generally ranged between 7% and 9%. Bank-originated prime loans consistently exhibit lower LTVs and PTIs relative to original equipment manufacturer (OEM) captives and other finance companies, reflecting differences in advance-rate limits and affordability thresholds.
• Non-prime LTVs have increased, while PTIs remain elevated but stable. Between 2022 and 2025, non-prime WA LTVs increased approximately five percentage points, even as vehicle values moderated. Over the same period, WA PTIs remained above 10%, meaningfully higher than prime PTIs.
• Term trends differ across credit segments. Prime term extension reflects a shift primarily from shorter-term buckets into the 72-77 month range, with only modest growth in loans with terms of 78 months or longer. In contrast, non-prime production shows a more pronounced migration into the 78-83 month bucket, contributing to a modest increase in overall WA original terms for the segment.

Click here to view the report.

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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