Automotive leasing levels, average loan amount and average monthly payments each reached highs in the first quarter, Experian said in its latest State of the Automotive Finance Market report, released today.
In addition, subprime borrowers accounted for a larger share of the new-vehicle loan market, in part because prime borrowers were moving to leases, Experian data showed.
Leasing made up an all-time high of 31.1 percent of new-vehicle transactions --including cash deals -- in the quarter, compared with 26.7 percent a year earlier.
Used leases gain
Used-vehicle leasing, which was rarely considered an option before lenders such as Ally Financial, BMW Financial Services and Toyota Financial Services began offering used and certified pre-owned leasing options earlier this year, rose 2.1 percent from the year-earlier period to make up 4 percent of the lease market, Experian said.
“The continued rise in new vehicle costs have kept many consumers exploring options to keep their monthly payments affordable,” Melinda Zabritski, Experian’s senior director of automotive finance, said in a statement. “As long as vehicle prices continue to rise, we can expect leasing rates to grow along with them.”
Loan amount, payments
The average new-vehicle loan amount climbed to $30,032, an all-time high and a 4.6 percent rise over the year-earlier level. The average used-vehicle loan amount for franchised and independent dealers combined was $18,424, edging up 1.1 percent.
With the loan amount rise, the average monthly payments on new-vehicle loans also hit a record high, reaching $503, or $15 more than a year earlier. For used vehicles, the average monthly payment was $376 at a franchised dealership and $351 at an independent dealership.
Experian also found that more consumers in the prime credit segment have shifted to the used-vehicle market. Prime borrowers purchased used vehicles 54 percent of the time during the quarter, up from 52 percent a year earlier.
Prime, subprime
On the other end of the spectrum, more subprime borrowers leaned toward new-vehicle financing. The number of subprime borrowers financing new vehicles increased 5.5 percent from the year earlier, to 11percent. Overall, though, the percentage of subprime borrowers in the market fell 1.1 percent.
“The number of prime borrowers who switched to leasing has driven an increase in the percentage of subprime borrowers shown in the new vehicle segment,” Zabritski said. “As a result, we will continue to see consumers view used vehicles, longer-term loans and leasing as a way to keep payments affordable.”
The average new-vehicle loan term increased to 68 months, one month higher than a year earlier. For used-vehicle loans by franchised dealerships, the term also grew one month to 66 months.
