Tag: auto finance
To help the industry better understand the widespread growth, ahead of the show we compiled an Auto Finance Year-in-Review report to break down all things EV—from financing trends to vehicle segments and more.
According to Experian’s State of Automotive Finance Market: Q3 2021 report, leasing comprised 24.03% of new vehicle financing in Q3 2021.
Expanded FCRA regulated data can help lenders extend more credit, and ensure consumers have access to affordable credit when they need it.
Trends can vary based on location. In the Q1 2021 State of the Automotive Finance Market report, we took a look at market share nationally and regionally.
Consumers are taking advantage of new car incentives, low interest rates and longer-term loans in order to ensure that their vehicle purchase is manageable.
As subprime originations decrease, some think that subprime consumers are being locked out of the automotive finance market, but that’s not the whole story.
Origination data from April and May provide some insight into the more immediate effects of the pandemic on the automotive industry.
In Q1 2020, 30-day delinquencies decreased from 1.98 percent in Q1 2019 to 1.93 percent, while 60-day delinquencies dropped from 0.68 percent to 0.67.
If there is one word to describe the automotive finance market in Q4 2019, it’s stable. By nearly every measure, the automotive finance market continued to move along at a good pace.
The average new vehicle loan hit $32,119 in Q2 2019. Average used vehicle loan amounts reached $20,156 in Q2 2019.
Experian Boost gives consumers greater control over their credit profiles by allowing them to add non-traditional credit information to their Experian credit file.
Subprime originations hit the lowest overall share of the market seen in 11 years, but does that mean people are being locked out car ownership? Not necessarily, according to the Q3 State of the Automotive Finance Market report.To gain accurate insights from the vast amount of data available, it’s important to look at the entire picture that is created by the data. The decrease in subprime originations is due to many factors, one of which being that credit scores are increasing across the board (average is now 717 for new and 661 for used), which naturally shifts more consumers into the higher credit tiers. Loan origination market share are just one of the trends seen in this quarter’s report. Ultimately, examining the data can help inform lenders and help them make the right lending decisions. Exploring options for affordability While consumers analyze different possibilities to ensure their monthly payments are affordable, leasing is one of the more reasonable options in terms of monthly payments. In fact, the difference between the average new lease payment and new car payment usually averages more $100—and sometimes well over—which is a significant amount for the average American budget. In fact, leases of new vehicles are hovering around 30 percent, which is one of the factors that is aiding in new car sales. In turn, this then helps the used-vehicle market, as the high number of leases create a larger supply of quality use vehicles when they come off-lease and make their way back into the market. On-time payments continue to improve As consumer preferences continue to trend towards more expensive vehicles, such as crossovers, SUVs, and pickups, affordability will continue to be a topic of discussion. But consumers appear to be managing the higher prices, as in addition to the tactics mentioned above, 30- and 60-day delinquency rates declined since Q3 2017, from 2.39 percent to 2.23 percent and 0.76 percent to 0.72 percent, respectively. The automotive finance market is one where the old saying “no news is good news” continues to remain true. While there aren’t significant changes in the numbers quarter over quarter, this signals that the market is at a good place in its cycle. To learn more about the State of the Automotive Finance Market report, or to watch the webinar, click here.
With steady sales growth the past several years, the auto industry has had a great run since the trough of the Great Recession in 2009. Based on the latest data published in the State of the Automotive Finance Market report, the auto industry’s robust sales totaled more than 17 million vehicles in 2016, pushing the total open auto loan balances to a record high of $1.072 trillion, up from $987 billion in Q4 2015. Despite the current boom, new vehicle affordability is becoming more challenging. The average monthly payment for a new vehicle loan jumped from $493 in Q4 2015 to $506 in Q4 2016, while the average new vehicle loan reached an all-time high in Q4 2016, at $30,621. In addition, the chasm between new vehicle loan and used vehicle loan average amounts is wider than ever at $11,292. This trend appears to be pushing more credit-worthy customers into the used vehicle market. In Q4 2016, the percentage of used vehicle loans going to prime and super prime customers was up from 45.49 percent in Q4 2015 to 47.76 percent in Q4 2016. In addition, the average credit score for used vehicle loans is up from 649 in Q4 2015 to 654 in Q4 2016. Consumers also appear to be combating the vehicle affordability issue by shifting into leases or longer-term loans to keep their monthly payments low. Leasing was up from 28.87 percent of all new vehicle financing in Q4 2015 to 28.94 percent in Q4 2016. Loan terms of 73 to 84 months now account for 32.1 percent of all new vehicle loans, up from 29 percent in Q4 2015. Keeping payments manageable will help keep people out of delinquencies, which is good for consumers and their lenders. Data shows that 30-day delinquencies were relatively flat, moving from 2.42 percent in Q4 2015 to 2.44 percent in Q4 2016, while 60-day delinquencies are growing, moving from 0.71 percent to 0.78 percent. It seems that as long as new vehicle costs rise, it is likely that more people will move toward leasing, longer term loans and used vehicles. While none of these trends are inherently bad, they could re-shape dealer strategy moving forward. Many analysts predict flat new vehicle sales in 2017, making used vehicle, F&I and service business more important to overall dealership growth this year.