Majority of consumers rely on financing as loan amounts for new vehicles skyrocket to reach another all-time high
SCHAUMBURG, Ill., March 4, 2015 /PRNewswire/ -- Experian Automotive today announced that consumers are relying on financing more than ever to buy their next vehicle. According to its latest State of the Automotive Finance Market report, the percentage of new vehicles purchased with financing in the fourth quarter of 2014 increased over the previous year to reach 84 percent. Used vehicles that were financed reached a record high of 55.2 percent.
Furthermore, the study shows that the average loan amount for a new vehicle in the fourth quarter of 2014 once again hit its highest level on record, reaching $28,381. This represents a more than $950 increase from a year ago and a $582 increase from the previous quarter. For used vehicles, the average loan amount increased $437 from last year to reach $18,411.
"In most parts of the country, vehicles are viewed as a necessity to everyday life, which is why we continue to see consumers willing to take out larger loans as the average price of vehicles continues to rise," said Melinda Zabritski, Experian's senior director of automotive finance. "As more consumers lean on financing, it's important for them to consider all of the factors involved, including monthly payments, interest rates and loan terms. These insights will enable them to have a better understanding of their potential payment obligation and take the appropriate action in order to make the vehicle fit within their monthly budget and more easily meet payment terms throughout the life of the loan."
Findings from the report also show that leasing continued to gain traction, as it jumped 3.6 percent from a year ago to reach nearly 30 percent of all new vehicles financed in the quarter.
In addition to the number of leases increasing in the quarter, the study shows that it was slightly more affordable and easier to obtain one. The average monthly lease payment decreased $12 from a year ago to reach $408 in Q4 2014. What's more, the average new-vehicle lessee had an average credit score of 717 in Q4 2014, down two points over the same time period.
In other findings:
- The average credit score for a new-vehicle loan dropped 3 points in Q4 2014 to reach 712
- The average credit score for a used vehicle loan increased 2 points in the quarter to reach 648
- In the fourth quarter of 2014, the average monthly payment for a new vehicle hit $482 — its highest level on record
- Interest rates for new-vehicle loans crept up in Q4 2014 to 4.56 percent
- Loan terms for new and used vehicles increased from a year ago to reach 66 months and 62 months, respectively
- Captives were the only lender type to see an increase in market share year over year
Experian's quarterly State of the Automotive Finance Market report leverages information from its AutoCount® database, which enables insights into the automotive-lending market by geography, credit score and vehicle registrations, among other factors. For more information on the latest State of the Automotive Finance Market report, please visit http://bit.ly/1LbNl1K.
About Experian Automotive
Experian Automotive provides information services and market intelligence that enables results-driven professionals to gain the fullest possible understanding of the market, the vehicles and the people who buy them. Its North American Vehicle DatabaseSM houses data on nearly 700 million vehicles and, when combined with Experian's credit, consumer and business information, provides an integrated perspective into the automotive marketplace. Experian Automotive's AutoCheck® vehicle history reports provide dealers and consumers with in-depth information, allowing them to confidently understand, compare and select the right vehicles. For more information on Experian Automotive and its suite of services, visit our Website at http://www.experian.com/automotive.
About Experian
We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score, and protect against identity theft. In 2014, we were named by Forbes magazine as one of the "World's Most Innovative Companies."
We employ approximately 16,000 people in 39 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and Sao Paulo, Brazil.
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Contact:
Roslyn Whitehurst
Experian Public Relations
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[email protected]
Twitter: @RozWhitehurst
SOURCE Experian Automotive
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