With rising vehicle prices, Experian finds consumers continue to uncover ways to manage monthly payments

New report shows a record percentage of prime borrowers opting for used vehicles, as loan terms reach a new high and new vehicle loan amounts remain above $32,000


SCHAUMBURG, Ill., Sept. 5, 2019 /Kiewire/ — Affordability continues to remain top-of-mind for most in the automotive industry; however, consumers appear to be making due. According to Experian’s Q2 2019 State of the Automotive Finance Market report, consumers are exploring all available options to make costs more manageable, including extending loan terms, and deciding between new or used vehicles.

One of the more notable ways consumers have managed to make their monthly payments more affordable is to opt for used vehicles. In fact, prime and super prime consumers financed used vehicles at record levels – these borrowers comprised more than 57 percent of used vehicle financing during the second quarter.

“In previous years, it was common for most prime borrowers to opt for new vehicles. These vehicles tend to have better warranties and require less upfront maintenance,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions. “But with loan amounts for new and used vehicles on the rise, and a higher volume of vehicles coming off-lease, there are late-model options available that borrowers can consider. It’s important for the industry to keep an eye on these trends to help inform future business decisions.”

The shift to used vehicles comes as the average loan amounts for vehicles continue to rise. Based on the report, the average amount for a new vehicle loan amount was $32,119, while the average used vehicle loan amount hit $20,156. Additionally, the average monthly payments were $550 and $392 for new and used, respectively.

The report also found that consumers appear to be managing payments by extending loan terms. The average loan terms for new and used vehicles reached record highs. For new vehicles, the average loan term was 69.17 months, while the average loan term was 64.82 months for used vehicles. The extension of loan terms come as interest rates continue to remain more than 6 percent for new vehicles and more than 10 percent for used.

“There are many factors that can impact vehicles costs and car buying decisions, but, perhaps the factor that is most critical is a car shopper’s credit score – it can impact interest rates and loan terms, which impacts monthly payments,” Zabritski said. “Prior to heading into the dealership, car shoppers should explore ways to improve their credit standing, such as leveraging new tools and resources available to them, like Experian Boost, that can help increase their score and potentially arrange better terms.”

There are some industry pundits that continue to be concerned that consumers can’t handle larger payments, however the data tells a different story. Delinquencies remained stable in Q2 2019. Thirty-day delinquencies dropped to 2.11 percent, from 2.12 percent in Q2 2018, while 60-day delinquencies saw a slight increase from 0.64 percent to 0.65 percent in the same time frame.

Additional findings for Q2 2019:

  • Outstanding automotive loan balances totaled $1.197 billion.
  • The percentage of outstanding loan balances held by subprime and deep-subprime consumers saw slight growth YOY (from 18.81 percent in Q2 2018 to 18.95 percent in Q2 2019) but remained below 19 percent.
  • New vehicle leasing saw a slight decrease from 30.41 percent in Q2 2019 to 30.04 percent in Q2 2019.
  • Credit scores saw a two-point increase for new vehicle financing (from 715 to 717) while used saw a one-point increase (655 to 656) YOY.
  • The average price difference in monthly payments between loans and leases is $92.

To view the entire Q2 2019 State of the Automotive Finance Market report webinar, visit https://www.experian.com/automotive/automotive-webinars.html.

About Experian
Experian is the world’s leading global information services company. During life’s big moments — from buying a home or a car to sending a child to college to growing a business by connecting with new customers — we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organizations to prevent identity fraud and crime.

We have 17,200 people operating across 44 countries, and every day we’re investing in new technologies, talented people and innovation to help all our clients maximize every opportunity. We are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index.

Learn more at www.experianplc.com or visit our global content hub at our global news blog for the latest news and insights from the Group.

Experian and the Experian marks used herein are trademarks or registered trademarks of Experian and its affiliates. Other product and company names mentioned herein are the property of their respective owners.

Jordan Takeyama
Experian Public Relations
1 714 830 7561
[email protected]


Related Links