SCHAUMBURG, Ill. — Experian Automotive reported this week that more consumers are choosing to lease vehicles, bringing the share of new vehicles financed with a lease to its highest level since the company began publically reporting the data in 2006.
According to its latest State of the Automotive Finance Market report, Experian Automotive found that 28.4% of all new vehicles financed were leases in the fourth quarter, up from 24.8% in the year-ago period.
“Leasing continues to grow in popularity among car shoppers, especially those hoping to stay within a strict monthly budget,” said Melinda Zabritski, senior director of automotive credit for Experian Automotive. “Our analysis this quarter showed that the average monthly lease payment was $51 lower than the average loan payment, which can make a big difference to consumers trying to stretch their dollar.”
Other findings from the report showed the average amount financed for a new vehicle was $27,430 in the fourth quarter 2013, up from $26,691 one year ago. This marked the highest average loan amount for a new vehicle since 2008 and the first time the amount has exceeded $27,000. Additionally, the average loan amount for a used vehicle during the quarter was $17,974, up $345 from the previous year and a record high since 2008.
Financing also became easier to obtain during the quarter, with average credit scores for both new leases and loans decreasing from the previous year. The average credit score for a new-vehicle lease dropped 16 points from a year ago to 719, while the average credit score for new-vehicle loans realized a smaller year-over-year decrease — dropping from 724 in the year-ago period to 715.
Market share for nonprime, subprime and deep subprime new-vehicle loans also rose slightly in fourth quarter, increased from 32.8& in the year-ago quarter to 34.1%. For used vehicles, below-prime loans accounted for 62.8% of all loans, down 1.6 percent from the year-ago period.
“We are still seeing remarkable stability in the automotive finance industry, even as lenders continue to ease slightly on credit standards to provide loans and leases,” Zabritski noted. “What makes this good news for consumers is that the more credit-challenged car shoppers who need a vehicle may find that they have more financing options to choose from and can more easily shop around for the best rates and terms.”
Experian Automotive also reported an increase in monthly payments for used cars, which rose from $348 in the year-ago period to $352 in the fourth quarter 2013. New- and used-vehicle interest rates were also up, rising from 4.36% and 8.48% in the year-ago period to 4.37% and 8.71%, respectively.