Captives see largest share of new vehicle financing since the recession
Experian Automotive today announced that consumers continue to lease vehicles at a record pace. According to the Q3 2015 State of the Automotive Finance Market report, leasing accounted for nearly 27 percent of all new vehicle transactions, up from 24.7 percent the previous year. This marks the highest percentage of vehicles leased since Experian began tracking the data publicly in 2006. Findings from the report also showed that the average monthly lease payment was $398 during the quarter, up $1 from a year ago.
“As the price for a new or used vehicle continues to rise, leasing has become a more viable financing option for consumers looking to maintain an affordable monthly payment,” said Melinda Zabritski, Experian’s senior director of automotive finance. “While consumers can save an average of $84 per month by leasing rather than taking out a loan on a new vehicle, they should make sure leasing fits their lifestyle. Oftentimes there are mileage caps and other considerations that consumers should familiarize themselves with before entering into a leasing agreement.”
Rising vehicle prices also have given way to record loan amounts for new and used vehicles. During the third quarter of 2015, the average amount financed for a new vehicle was $28,936, up $1,137 from the previous year. The average amount financed for a used vehicle was $18,866, up $290 over the same time period. Furthermore, the gap between new and used loan amounts also has grown. On average, consumers finance $10,070 less on a used vehicle than on a new one.
Extending loan terms is another method consumers turned to in order to keep monthly payments low. During the third quarter of 2015, the percentage of consumers who took out new and used vehicle loans with terms between 61 and 72 months reached all-time highs. For new vehicles, approximately 44 percent took out 61- to 72-month loans, and more than 41 percent financed a used vehicle for the same duration. The percentage of consumers extending their loans even longer also has increased. Loans for new vehicles extending 73 to 84 months increased 17.1 percent over the previous year, reaching a Q3 record high of 27.5 percent. Used vehicle loans extending in the 73- to 84-month term, however, reached an all-time high of 16.2 percent (a 12 percent increase over the previous year).
Captive lenders gain ground
One of the biggest shifts in the automotive lending industry during Q3 2015 was the resurgence of captive lenders — the lending companies owned by vehicle manufacturers. In the third quarter of 2015, captive lenders financed 51.6 percent of new vehicle loans, up from 36.8 percent in Q3 2011. This represents the largest market share of new vehicle financing for captives since the recession.
Market share findings for other lending types show banks still holding the largest share for new and used vehicle loans combined, at 34.7 percent. Finance companies, which get most of their business from customers with subprime and deep-subprime credit, gained share year over year, reaching 13.34 percent in Q3 2015, up 6.4 percent from the previous year.
“Captive lending has made a comeback since suffering a steep drop-off caused by declining new sales and lender-type shifts during the recession,” Zabritski continued. “This is good news for manufacturers, as their captive finance companies often provide an additional source of revenue as well as a strong pipeline to credit for their dealer networks.”
Other findings:
Consumers continue to rely on financing; the percentage of new vehicles financed reached an all-time high of 86.6 percent
The average credit score for a new vehicle loan fell to 710, the lowest since Q3 2007
During Q3 2015, the average monthly payment for a new vehicle was $482, up $12 from the previous year
The average monthly payment for a used vehicle reached $361, an increase of $3 from a year ago
The average interest rate for a new vehicle hit 4.63 percent, while the average interest rate for a used vehicle reached 8.76 percent
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 experian.com/automotive.
About Experian
We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making.
We also help people to check their credit report and credit score, and protect against identity theft. In 2015, we were named by Forbes magazine as one of the “World’s Most Innovative Companies.”
We employ approximately 17,000 people in 38 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and Sao Paulo, Brazil.
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, 2015, was US$4.8 billion.
Experian and the Experian marks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the property of their respective owners.
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