Experian’s State of the Automotive Finance Market report found that automotive leasing levels, average loan amount and average monthly payments each reached record highs in the first quarter of 2015.
Leasing accounted for 31.1% (an all-time high) of new vehicle transactions in the first quarter of 2015, compared to 26.7% during the same period in 2014. Used vehicle leasing, which accounted for less than 2% of the market in the first quarter of 2014, nearly doubled to 4% of the market in the first quarter of 2015, thanks to several lenders beginning to offer used and certified pre-owned leasing options.
The average new vehicle loan amount also climbed to $30,032, another all-time high, and a 4.6% rise over the year earlier level. The average used vehicle loan amount for franchised and independent dealers combined was $18,424, edging up 1.1%.
With the loan amount rise, the average monthly payments on new vehicle loans also hit a record high, reaching $503, or $15 more than a year earlier. For used vehicles, the average monthly payment was $376 at a franchised dealership and $351 at an independent dealership.
Experian also found that more consumers in the prime credit segment have shifted to the used vehicle market. Prime borrowers purchased used vehicles 54% of the time during the quarter, up from 52% a year earlier. Ironically, more subprime borrowers leaned toward new vehicle financing. The number of subprime borrowers financing new vehicles increased 5.5% from the year earlier, to 11%. Overall, though, the percentage of subprime borrowers in the market fell 1.1%.
The average new vehicle loan term increased to 68 months, one month more than a year earlier. For used vehicle loans by franchised dealerships, the term also grew one month to 66 months.