Auto Loan Debt Sets Record Highs

The automotive industry continues to set record highs—the latest in the form of $1.2 trillion in total outstanding automotive loan balances. That's an increase of 6.5% compared with the first quarter (Q1) of 2018, according to data from Experian Automotive.

The number of passenger vehicles—which include crossovers and pickup trucks—on the road also continues to rise: There are currently 276 million vehicles in the U.S., which is a 1.7% increase over the prior year. New and used vehicle registrations still remain strong despite a decrease of less than 1% over the past year.

85% of New Passenger Vehicles Are Financed

Of the new passenger vehicles on the road, 85.4% are financed with a loan or lease, according to Experian data from Q1 2019. That's roughly the same percentage as compared with 2018. Among used vehicles on the road, 55.5% are financed, which is a slight increase over Q1 2018 figures.

Percentage of Vehicles Financed
Type of Vehicle20182019
New Vehicles85.3%85.4%
Used Vehicles54.0%55.5%

Note: Data is from Q1 of each year
Source: Experian Automotive

Average Loan Amounts and Monthly Payments Hit New Highs

The average loan amount on new passenger vehicles topped $32,000 for the first time in Q1 2019, setting a new record high of $32,187, up $733 from last year. Those increases helped drive up the average monthly payment to $554—the first time the average loan payment on a new car has surpassed $550.

The average loan amount for used passenger vehicles also reached a new high of $20,137 in Q1 2019, an increase of $601 year over year. The average loan payment on a used car rose $19 to $391 a month.

Average Loan Statistics for New and Used Vehicles
Loan SpecificsNew VehicleUsed Vehicle
Loan Amount$32,187$20,137
Loan Rate6.16%10.06%
Loan Term68.9 months64.7 months
Monthly Payment $554$391

Note: Data is from Q1 2019
Source: Experian Automotive

Longer-Term Loans Dominate Auto Market

Car buyers continue to stretch out their auto loans over longer periods. However, while longer loan terms continue to dominate the market, shorter-term loans saw significant growth in Q1 2019 year over year. For new passenger vehicles, the number of new loans between 85 and 96 months increased 38% compared with Q1 2018, while loans between 49 and 60 months jumped 18%. For used vehicles, loans between 73 and 84 months led the market with 42.1% of loans.

Percentage of New and Used Passenger Vehicle Loans by Term Length
MonthsNew VehiclesYear-Over-Year ChangeMonthsUsed VehiclesYear-Over-Year Change
49 - 6020.8%18%37 - 489.4%-5%
61 - 7238.0%-8%49 - 6022.3%-3%
73 - 8432.0%-5%61 - 7242.1%3%
85 - 961.8%38%73 - 8420.0%2%

Note: Data is from Q1 2019
Source: Experian Automotive

Subprime Auto Lending Remains at 20%

Overall auto subprime lending, including loans and leases for new and used passenger vehicles, remains at just over 20% of the finance space, which is flat compared with the same time last year.

Whether prime or subprime, auto loan and lease borrowers tend to keep up with their payments. Car loans and leases with delinquent payments (30 to 59 days past due) accounted for just 2% of all auto loans and leases, a slight increase from Q1 2018.

Just 2% of all loan and lease payments are 30 days or more past due

Leasing Hovers Around 30%

The percentage of new passenger vehicles that are leased was 29.1% in Q1 2019, slightly down from last year. Average monthly lease payments rose this past year to $457, an increase of 5%, or $21 a month—but still $97 less than the average loan payment on a purchased car. Leasing term lengths remained around 36 months. While new cars dominate the leasing market, the number of leased used cars reached 4.7% of the total lease market in Q1 2019.

Honda Civic Is the Most Leased New Passenger Vehicle

Crossover vehicles, or CUVs, dominate the market for most leased new passenger vehicles. The most leased model, however, is the Honda Civic, with 3.7% market share in Q1 2019.

Top 10 Leased New Passenger Vehicle Models by Market Share
Car ModelMarket Share
Honda Civic3.7%
Chevrolet Equinox3.3%
Honda CR-V3.1%
Honda Accord2.9%
Toyota RAV42.4%
Nissan Rogue2.1%
Jeep Grand Cherokee2.1%
Jeep Cherokee2.0%
Chevrolet Silverado 15002.0%
Ford F-1501.7%

Note: Data is from Q1 2019
Source: Experian Automotive

Full-Sized Pickups Are Most Popular Vehicle for 10 Years Running

The leading vehicle segment accounting for the largest share of passenger vehicles on the road is full-sized pickups, which increased its share slightly over Q1 2018 to 15.6% in Q1 2019. Next is the mid-range car standard segment, including the Honda Civic and Toyota Camry, which decreased to 10.3% of market share. Crossover vehicles increased to 9.1% and surpassed the small-car economy segment, which dropped to 8.7% from Q1 2018. The combined hybrid and electric car market share rose slightly to 2%.

Looking at new-model registrations in Q1 2019, the Ford F-150 remains steady at the top with 3.1% of the market, followed by the revamped Honda CR-V, which grew to 2.9% market share. While the Chevrolet Silverado 1500 barely leads the Ram 1500, the Ram 1500 has increased market share by jumping from 2% last year to 2.5% this year.

Top 10 New-Vehicle Registrations
Vehicle ModelMarket Share
Ford F-1503.1%
Honda CR-V2.9%
Chevrolet Silverado 15002.5%
Ram 15002.5%
Toyota RAV42.4%
Honda Civic2.4%
Chevrolet Equinox2.2%
Honda Accord2.1%
Toyota Camry2.0%
Toyota Corolla1.9%

Note: Data is from Q1 2019
Source: Experian Automotive

Who Is Buying New Vehicles?

Baby boomers still account for the largest share of new-vehicle registrations, at 32.2% in Q1 2019. Millennials are the second-largest group of buyers, at 28.6%, just ahead of Gen X buyers at 27.1% and followed further behind by the silent generation at 8.3%. While small, the group of Gen Z buyers is increasing its share rapidly and currently stands at 3.8%.

Hybrid and Electric Light Vehicles Account for 3.5% of New Registrations

Examining the automotive industry by fuel types shows that gasoline-fueled cars, including diesel and flex fuel, accounted for 95.8% of new vehicle registrations in Q1 2019, while hybrid and electric cars made up 3.5% of new registrations. While new-vehicle registration volume among passenger vehicles reached 4.1 million in 2019, only 1.1% of those registrations were for electric vehicles, representing a slight decrease from Q1 2018.

Breaking down the electric car market by brand shows that Tesla boasted a whopping 78.8% of all new electric car registrations in Q1 2019. It was followed by Chevrolet at 9.1%, Nissan at 5.6% and BMW at 1.9% market share. While the number of brands producing electric vehicles is limited now, you can expect to see that list grow over the next year as other manufacturers introduce new electric alternatives. Looking at top electric makes and models, some grew more than others in the past year, led by the Tesla Model 3, which grew 308% when comparing Q1 2018 with Q1 2019.

California Leads the Electric Car Market Among States

California remains the electric car market leader among states, with 38.2% of all electric vehicle registrations. However, that represents a significant drop from Q1 2018, when California had nearly 47% of all electric vehicle registrations. Of the top states, Texas holds 7.9% of electric vehicle registrations, with Washington at 4.7%, Florida at 4.6%, Colorado at 3.8%, and New Jersey at 3.1%. These vehicle registrations will likely keep increasing in more markets as the adoption of electric vehicles with lower prices, tax incentives and available charging stations become more mainstream, along with more models launching later this year and next.

Used Could Be the New "New"

Within the auto industry, the question of how much a person can afford to spend on a car is front and center. With the average cost of a new car surpassing $32,000 and the average auto loan payment for new cars topping $550, consumers are likely taking notice.

Many car shoppers decide on a vehicle based on the monthly payment amount, and since average used-vehicle loan payments come in at $163 less than average loan payments for new cars, more people may decide on used vehicles when they're looking to purchase a car. Car shoppers are also using leasing as a way to keep down their monthly payments, which is no surprise since the average lease payment is $97 less than the average loan payment.

Despite increased vehicle costs, loan amounts and monthly payments, low loan delinquency rates and increased sales indicate an auto finance market that remains healthy overall. As car shoppers become savvier in finding ways to shrink their monthly payments, that could lead to an increase in the number of both purchased and leased used cars.

How to Improve Your Credit Score Before Getting an Auto Loan

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