Analysis of credit scores, and automobile loans

0

Have you heard the old saying that "Banks only loan money to people who don't need it"?  Let's analyze the data and see if that is true!...

I'm very much a car-guy, and I love learning about all the new vehicles, and love the new-car feel ... and even the smell.  It's hard to not like a nicely detailed sporty vehicle. For example, here's a picture of the Miata a co-worker (and fellow car enthusiast) recently bought. Looks really nice sitting there on the Blue Ridge Parkway, doesn't it!

jims_miata2

 ... and with the price of vehicles these days, most people need a loan to buy one. Speaking of car loans, I recently saw a very interesting article by Liberty Street Economics where they showed how much $ in car loans was made, grouped by credit score. I found the raw data, downloaded it, and created my own SAS version of the graph. I kept mine very similar to their original, but cleaned up the time axis a little (only showing the year at each tick mark), stacked the color legend values, and included markers on the lines (which I think provides a little more visual insight into how fast the data is changing, etc).

auto_loan_originations

As you can see in the graph, subprime lending (to people with lower credit scores) took the biggest hit during the recent recession, but is currently making a comeback.

Later in the article, they show the same graph split into 2 categories - auto finance companies, and banks & credit unions. The auto finance companies tend to cater towards the subprime lending more than the banks & credit unions. Rather than scaling them both to the same axis of the first graph ($30 billion), I let each of these auto-scale to show the spread of the data in my SAS version.

auto_loan_originations1

auto_loan_originations2

And, I guess in answer to the original question, it appears that banks do loan money to people who need it (ie, people who have low credit scores) - close to $6 billion this year. But they loan a lot more money to people with higher credit scores.

Anybody got any inside-insight into this data, or ideas about other ways to graph this data? - Feel free to share it in a comment!

 

Share

About Author

Robert Allison

The Graph Guy!

Robert has worked at SAS for over 25 years, and is perhaps the foremost expert in creating custom graphs using SAS/GRAPH. His educational background is in Computer Science, and he holds a BS, MS, and PhD from NC State University. He is the author of several conference papers, has won a few graphic competitions, and has written a book (SAS/GRAPH: Beyond the Basics).

Leave A Reply

Back to Top