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Experian Report, J.D. Power Data Show Leasing, Vehicle Financing, Monthly Payments Up Slightly

Experian Report, J.D. Power Data Show Leasing, Vehicle Financing, Monthly Payments Up Slightly

By Joseph Dobrian, June 06, 2016
Auto leasing reached its highest level in recorded history in the first quarter of 2016, according to the latest State of the Automotive Finance Market report from Experian, an automotive information services provider based in Schaumburg, Ill. The report also notes that the average loan amount and monthly payment for new vehicles has continued to trend upward—which could be why leasing is gaining popularity.

The report notes that leasing accounted for 31.1% of all new-vehicle transactions during the first quarter of 2016. Although leasing is still primarily used to finance new vehicles, used-vehicle leasing was up 2.1% from the first quarter of 2015.

Prime borrowers represented more than 54% in the first quarter of 2016, a 4.8% increase from the same period in 2015. But while the percentage of subprime borrowers in the total loan market decreased by 1.1%, the percentage of subprime borrowers for new vehicles rose 5.5% over the same period last year.

According to new-vehicle transaction data provided by the Power Information Network® (PIN) from J.D. Power, both the dollar amount financed and the percentage of the purchase financed were up slightly through the first 5 months of this year. The average net capitalization of a vehicle purchased from January 1 through May 31 of last year was $30,565, representing 84.6% of the total purchase price. For that same period in 2016, average net capitalization was $31,524, or 85.4% of the purchase price. Average monthly payments rose from $471 to $475 during that period.

Here are some of the Experian report’s other key findings (January through March 2016):
  • Average loan amount for a new vehicle is $30,032—an all-time high—while average loan amounts for used vehicles are $20,723 for franchise dealers and $16,124 for independent dealers.
  • Average interest rates are 4.79% for a new-vehicle loan; 7.81% for a used-vehicle loan at franchise dealers; and 12.22% for a used-vehicle loan at independent dealers.
  • Average monthly payments for new vehicles are at an all-time high: $503. Averages for used-vehicle loans are $376 at franchise dealers and $351 at independent dealers.

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