ATLANTA and NEW YORK — New auto loan and lease data from CreditForecast.com, provider of consumer credit data and forecasts, showed that most consumers looking to buy a new vehicle are still financing their purchases with loans rather than leases. The report, however, noted that the volume of leases is expanding rapidly and is expected to grow by approximately 50 percent by the end of 2017.
Total U.S. auto lease balances increased 9 percent in March compared with a year ago, more than twice the increase in auto loan balances, which grew by 4.2 percent over the same period.
Lease balances originated by auto finance companies rose 11 percent in March vs. a year ago. CreditForecast.com forecasts auto lease balances to grow at an 8 percent average annual rate through the end of 2017, while auto loan balances are expected to grow between 2 and 3 percent annually over the same period.
"Auto finance companies have ramped up the number of leases they are providing to well-qualified borrowers with higher credit scores," said Amy Crews-Cutts, chief economist of Equifax, which analyzed the report with Moody's. "Leases are growing in popularity in California, Florida and the Northeastern part of the country,"
Lease financing represents approximately 10 percent of U.S. auto lending provided by finance companies, which originate a little more than half of all U.S. auto credit. Financing from banks and credit unions comprise the remaining portion of U.S. auto lending.
"Growth in originations by auto finance companies will drive further expansion in lease balances over the next five years,” said Dr. Cristian de Ritis, director of Consumer Credit Economics at Moody's Analytics. “Auto finance companies, which issue the large majority of auto leases, are more sensitive to the growth of the U.S. economy, and as the economy grows, they are likely to grow their auto lending originations faster than banks will."