zabritski melinda

The total balance of outstanding auto loans in the US reached $1.1 trillion at the end of last year.

Data from Experian shows loan balances grew year-on-year just over 5%, or $57 billion, with banks now accounting for 33% of the market, while auto captives have supplied 23% of finance and credit unions 28% following their surge of double-digit growth for the past few years.

Most of the outstanding balances remain in the prime or super prime sector, which accounts for 61% of the market and most of the increase in finance, with sub-prime accounting for just under 20% of the market.

Total open automotive loan balance

experian automotive loan ba

Source: Experian

Total open automotive loan balance

experian total loan balance

Source: Experian

Experian analysis also reveals that 30-day delinquency rates are improving, down from 2.44% to 2.36% between Q4 2016-17.

The percentage of new cars with financing was 85.1% in Q4 2017, down slightly on the previous year, while the proportion of used cars with financing grew from 53.5% to 53.8%.

In total, around 28% of new cars are leased, compared to 4% of used cars. Leasing tends to be favoured by prime and super prime borrowers, where 34.8% take the option, compared to less than one quarter for sub-prime.

Average new car loans reached a record high of $31,099, a rise of $509, while terms stretched to 69 months for new loans, although just under one-third are between 73-84 months.

The average loan term for a used car rose slightly to 64 months, with around 18% opting for 73-84-month repayment periods.

Lease repayment terms remained broadly unchanged at 36 months for new leases.

Average monthly repayments reached a new high, rising $8 a month to $515 for new loans and increasing $17 a month to $430 for new leases. Average used payments were also at record highs, reaching $371, a rise of $8 a month.

Interest rates averaged 5.11% for new vehicles and 8.84% for used at the end of last year.

Melinda Zabritski, Experian’s senior director of automotive financial solutions, said: “We can expect to see interest rate rises continue throughout 2018. Credit scores are improving as lending continues to shift into more prime segments.”

Percentage of vehicles with financing

experian vehicles with fina

Source: Experian

% of all new vehicles that are leased

experian new leased vehicle

Source: Experian

Finance Market: new v used units

experian finance market

Source: Experian

Used % of lease market

experian used leased market

Source: Experian