Interest Rates for auto loans hit all-time low, while average amount financed reaches highest point since 2008
SCHAUMBURG, IL--Dec. 4, 2013: Experian Automotive today announced that interest rates for new vehicle loans dropped to 4.27 percent, the lowest rate since the organization began publically reporting the data in 2008. According to its latest State of the Automotive Finance Market report, car buyers took advantage of the lower rates in Q3 2013 to help obtain larger loans. The report also found that the average amount financed for a new vehicle reached its highest point since 2008, coming in at $26,719, up from $25,963 in Q3 2012.
"The third quarter of 2013 proved to be a good time to purchase a new vehicle, particularly for consumers who buy based on their monthly payments," said Melinda Zabritski, senior director of automotive credit for Experian Automotive. "With loan rates at historic lows, car shoppers were able to take advantage and get a little more vehicle for their monthly payment. It's a win for everyone, as shoppers perceive they are getting better deals and manufacturers and dealers are boosting sales."
The 4.27 percent average interest rate for new vehicles in Q3 2013, combined with slightly longer payment terms (an average of 65 months in Q3 2013, up from 64 months in Q3 2012), helped keep monthly vehicle payments relatively flat. The average monthly payment during the period was $458 — just $6 higher than the average monthly payment in Q3 2012.
Leasing continued to be a significant part of the vehicle finance mix, accounting for 27.22 percent of all new vehicle financing. This was up from 24.40 percent in Q3 2012, but down slightly from 27.64 in Q2 2013. The average monthly lease payment also dropped slightly from $409 in Q3 2012 to $404 in Q3 2013.
Subprime loans see slight growth
Nonprime, subprime and deep subprime new vehicle loans rose slightly to 26.04 percent market share in Q3 2013, up from 24.84 percent in Q3 2012. For used vehicles, nonprime, subprime and deep subprime loans accounted for 54.95 percent market share in Q3 2013, up slightly from 54.43 percent in Q3 2012.
"The automotive lending market seems to have stabilized in Q3 2013," Zabritski said. "Subprime lending is still growing slightly, but is still well below prerecession levels in the highest risk segments, and its growth rate has slowed considerably. It seems as though lenders are approaching their ceiling for how much risk they are willing to take."
In other trends:
The average credit score for a new vehicle loan dropped to 753 in Q3 2013 from 755 in Q3 2012 The average credit score for a used vehicle remained flat year-over-year at 668 The average amount financed for a used vehicle rose to $17,900 in Q3 2013 from $17,577 in Q3 2012 Average monthly payments for used vehicles remained flat at $350