Tag Archive | "Monthly Payments"

Experian: More Consumers Turning to Leasing, Used Vehicles


SCHAUMBURG, Ill. — The average amount financed and the average monthly payment for new vehicles financed during 2015’s end-of-year quarter rose to record levels, according to Experian Automotive. But those weren’t the only records set during the period.

The credit reporting agency reported today that the average amount financed for a new vehicle in the fourth quarter increased by $1,170 from the prior-year period to $29,551 — the highest level recorded by Experian. The average monthly payment also rose $11 from a year ago to a new high of $493.

“People shop for vehicles largely based on monthly price, and right now, average dollar amounts for new vehicle loans are soaring,” said Melinda Zabritski, senior director of automotive credit for Experian Automotive. “In order to stay within their budget goals, we have seen that more consumers — even those within the prime and super-prime risk categories — are turning to leasing and used vehicles as cost-effective alternatives to buying new.”

Leasing accounted for a record high 33.6% of all new financing during the quarter, with the average lease payment landing at $412.

Additionally, used-vehicle loans accounted for 62.8 percent of all vehicle financing, with the average amount financed for a used vehicle coming out to $18,850. The average monthly payment for a used vehicle, according to Experian Automotive, was $359, with payment gap between new and used widening to an all-time high of $134 in the fourth quarter.

“Over the course of the last few years, we have seen the market stabilizing nicely,” Zabritski noted. “Credit scores are flattening out for new-vehicle financing and more prime consumers are shifting to used, which is helping increase the average score there as well.”

Experian reported that average credit scores across the board have flattened in the past few years. The average credit score for a new vehicle loan was 711, down from 712 in the prior-year period. Average credit scores for new vehicles peaked at 736 in 2009, then dropped 25 points from that period’s end-of-year quarter to the fourth quarter 2015. However, in the past six years, according to the firm, average credit scores for new-vehicle loans have dropped by only four points each year.

For used vehicles, average credit scores increased by one point to 649. Used-vehicle scores also have been relatively flat in recent years after peaking in 2009 at 657.

Here are other findings from Experian Automotive’s fourth quarter report:

  • Reliance on financing continues to grow, with 85.9% of all new vehicles and 54.7% of all used vehicles sold during the period having been financed.
  • The Top 5 models leased were the Honda Civic, Honda Accord, Toyota Camry, Toyota RAV4 and Ford Escape.
  • The Ford Fusion and the Chevrolet Silverado 1500 showed substantial gains in leasing during the period, rising 22% and 38%, respectively
  • The average interest rate for a new-vehicle loan was 4.63 percent, while the average interest rate for a used-vehicle loan reached 8.78 percent
  • Average loan terms for new and used vehicles held steady at 67 months and 63 months, respectively
  • Longer-term loans (those extending 73 to 84 months) for new vehicles grew by 12 percent to account for 29% of all new vehicles financed during the quarter. The percentage of used-vehicle loans with longer terms rose 10.8% to 16.4%.

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Payment Gap Between New and Used Hits All-Time High in Q2, Experian Reports


SCHAUMBURG, Ill. — Experian Automotive reported today that the gap between the average monthly payments for new and used vehicles during the second quarter reached a record $122 — the largest margin since Experian began publicly reporting auto finance data in 2008.

According to the firm, the average monthly payment for a new vehicle was $483, while the average monthly payment for a used vehicle was $361. But not only did the monthly-payment gap widen during the quarter, so did gap in total loan amounts, with the average new-vehicle and used-vehicle finance amounts reaching $28,524 and $18,671, respectively — a difference of $9,853.

“As the price of new vehicles continues to rise, and the gap between monthly payments for new and used vehicles widens, we see more and more consumers looking for ways to keep their vehicle payments affordable,” said Melinda Zabritski, Experian’s senior director of automotive finance. “This could be especially true for consumers who have the financial ability to pursue a new vehicle but may have sticker shock at the rising prices and don’t want the accompanying high monthly payments.”

And consumers took advantage of stretching loan terms to keep their monthly payments affordable, especially for used vehicles. According to Experian, the percentage of used vehicles financed for 73 to 84 months increased by 14.8% from a year ago to 16.1% — the highest percentage on record. Additionally, new vehicles financed for the same term length climbed 19.7% from a year ago to 28.8% in the second quarter.

Leasing also continued to be a popular option for payment-conscious car buyers, with the transaction type’s share of all vehicles financed during the quarter rising 30.2% from a year ago to 31.5%. And according to Experian’s analysis, lease terms extended past the 36-month average into the 37- to 48-month range, an 18% increase. Additionally, the average lease payment dropped $13 a month from a year ago to $394.

“The automotive finance market continues to progress in response to consumer demand,” said Zabritski. “The availability of different financing options allows consumers to stretch their dollar and more easily find a vehicle that meets their budgetary needs.”

Experian Automotive also reported that the share of used-vehicle financing rose from 53.8% one year ago to an all-time high of 55.5 percent. Also reaching a record high was the percentage of new vehicles financed, which rose from 85% in the year-ago period to 85.8%.

The average credit score for a new-vehicle loan dropped two points from last year to reach 709, while the average credit score for a used loan increased one point to 645 over the same time period.

Also during the second quarter, the average interest rate for a new-vehicle loan was 4.8%, up from 4.6% in the year-ago period. The interest rate for used vehicle loans was 9.1 percent, up from 8.8 percent over the same time period.

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