Experian Automotive report shows auto loans are still first choice in financing, but leasing has become more popular than ever
Schaumburg, Ill., March 04, 2014 — Experian Automotive today announced that more consumers are choosing to lease vehicles, bringing the share of new vehicles financed with a lease to its highest level since the company began publically reporting the data in 2006. According to its latest State of the Automotive Finance Market report, Experian Automotive found that 28.4 percent of all new vehicles financed were leases in Q4 2013, up from 24.8 percent the previous year.
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“Leasing continues to grow in popularity among car shoppers, especially those hoping to stay within a strict monthly budget,” said Melinda Zabritski, senior director of automotive credit for Experian Automotive. “Our analysis this quarter showed that the average monthly lease payment was $51 lower than the average loan payment, which can make a big difference to consumers trying to stretch their dollar.”
Average monthly payment
Other findings from the report showed the average amount financed for a new vehicle was $27,430 in Q4 2013, up from $26,691 in Q4 2012. This marked the highest average loan amount for a new vehicle since 2008 and the first time the amount has exceeded $27,000. Additionally, the average loan amount for a used vehicle during the quarter was $17,974, up $345 from the previous year, which was also a record-high since 2008.
Subprime market for new vehicles rises
Financing also became easier to obtain in Q4 2013, as the average credit scores for both new leases and loans decreased from the previous year. The average credit score for a new vehicle lease dropped 16 points to 719 in Q4 2013 — from 735 the previous year. The average credit score for new vehicle loans, however, saw a slightly smaller decrease year-over-year, dropping from 724 in Q4 2012 to 715 in Q4 2013.
Market share for nonprime, subprime and deep subprime new vehicle loans also rose slightly in Q4 2013 to 34.1 percent from 32.8 percent in Q4 2012. For used vehicles, nonprime, subprime and deep subprime loans accounted for 62.8 percent of all loans, down 1.6 percent from 63.8 percent in Q4 2012.
“We are still seeing remarkable stability in the automotive finance industry, even as lenders continue to ease slightly on credit standards to provide loans and leases,” Zabritski continued. “What makes this good news for consumers is that the more credit-challenged car shoppers who need a vehicle may find that they have more financing options to choose from and can more easily shop around for the best rates and terms.”
In other trends:
• Average monthly loan payments for used vehicles were up from $348 in Q4 2012 to $352 in Q4 2013
• New vehicle interest rates were up to 4.37 percent in Q4 2013 from 4.36 percent in Q4 2012
• Used vehicle interest rates were up to 8.71 percent in Q4 2013 from 8.48 percent in Q4 2012
• The average credit score for a used vehicle loan rose from 644 in Q4 2012 to 646 in Q4 2013
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About Experian Automotive
Experian Automotive provides information services and market intelligence that enables results-driven professionals to gain the fullest possible understanding of the market, the vehicles and the people who buy them. Its North American Vehicle DatabaseSM houses data on nearly 700 million vehicles and, when combined with Experian’s credit, consumer and business information, provides an integrated perspective into the automotive marketplace. Experian Automotive’s AutoCheck® vehicle history reports provide dealers and consumers with in-depth information, allowing them to confidently understand, compare and select the right vehicles. For more information on Experian Automotive and its suite of services, visit our Website at http://www.experian.com/automotive.
Experian® is the leading global information services company, providing data and analytical tools to clients around the world. The Group helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2013, was US$4.7 billion. Experian employs approximately 17,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
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