Experian Automotive: Auto leasing reaches record high
Longer term loans and low interest rates keep monthly payments down
SCHAUMBURG, IL--June 4, 2013: Experian Automotive today announced that new vehicle leasing rose by 12.5 percent to achieve the highest level since it began tracking the data in 2006. According to its State of the Automotive Finance Market report, leasing accounted for a record 27.5 percent of all new vehicles financed, up from 24.4 percent in Q1 2012. Additionally, findings from the report showed that the average monthly payment for a new vehicle financed in Q1 was $459, down from $462 in Q1 2012.
"Consumers tend to shop for vehicles based within the limits of their budget, and leasing is often seen as a viable path to a lower monthly payment," said Melinda Zabritski, senior director of Automotive Credit. "Lenders have seen overall stability come back to the market since the recession, and leasing has gradually returned as a larger part of many lender strategies."
While leasing a vehicle can help consumers achieve a lower monthly payment, the report also showed a rise in loan term lengths (65 months in Q1 2013, up from 64 months in Q1 2012) and a decrease in interest rates (4.5 percent in Q1 2013, down from 4.6 percent in Q1 2012), which helped to keep payments low for new vehicles financed.
In Q1, the average loan amount for a new vehicle financed increased by $628, going from $26,020 in Q1 2012 to $26,648 in Q1 2013. The average used vehicle loan increased $461, going from $17,071 in Q1 2012 to $17,532 in Q1 2013.
Subprime loans on the rise
The report also showed that consumers within all credit tiers were able to obtain financing in Q1. Most notably, loans going to consumers with credit outside of prime (nonprime, subprime and deep subprime) jumped to 45.2 percent of the overall loan market in Q1 2013, up from 44.4 percent in Q1 2012.
For new vehicles, the share of these loans jumped to 25.1 percent in Q1 2013 from 23.2 percent in Q1 2012. For used vehicles, nonprime, subprime and deep-subprime loans accounted for 57.7 percent market share in Q1 2013, up from 56.8 percent in Q1 2012.
In other trends:
- The average credit score for a new vehicle loan dropped to 755 in Q1 2013, down from 760 in Q1 2012
- The average credit score for a used vehicle loan dropped to 657 in Q1 2013, down from 659 in Q1 2012
- Finance companies had 15.5 percent market share, up 5.1 percent from Q1 2012
- Banks had 39.5 percent market share, down 1.7 percent from Q1 2012
- Captive finance companies had 17.3 percent market share, up 3.4 percent from Q1 2012
- Credit unions had 16.7 percent market share, up 0.4 percent from Q1 2012
- Buy Here/Pay Here financing had 10.7 percent market share, down 6.4 percent from Q1 2012