US Auto Loans Reach $1.14 Trillion

CHARLOTTE, N.C. — Lending Tree has released the 2019 edition of “Auto Loan Statistics,” an annual snapshot of the U.S. auto finance industry. Analysts found the total of outstanding U.S. auto loan balances reached $1.14 trillion in September 2018, a 3.1% increase from the prior year and a 23% increase since 2013.

Accordingly, average monthly payments for new-vehicle purchases ($530), new-vehicle leases ($430), and used vehicles ($381) all reached new highs, growing by 4% to 6% year-over-year. Auto loans now account for a full 8% of all outstanding consumer debt — up from 6% just a decade ago.

The report finds members of Generation X are the most likely group to finance their purchase: Nearly 60% of all Americans age 54 to 74 are paying off an auto loan, and they own the highest-average balance with a median of $18,741. Millennials (54.5%) are the second-most likely age group to take out an auto loan and the youngest car buyers, members of Generation Z (36.2%), are the least likely.

Other highlights of the report include:

• Dealers and finance sources originated a record 2.5 million auto loans in July 2018.
• Average auto loan terms stretched to 68.5 months in Q3, two weeks longer than Q3 2017.
• Average new-car loan amounts grew to $29,921, up $5,000 since 2008.
• Loans falling to 90 days past due held steady at around 2.3% of outstanding debt.

“I think the data reinforces what car dealers already know: People with higher credit scores could probably take out larger loans than they do,” said Jenn Jones, a former F&I manager and the report’s author. “The challenge would be how to entice them to do so. One thing that could help might be to widen their finance sources and work directly with more credit unions and banks — prime lending institutions that offer competitive rates so that money which would have otherwise gone toward interest could go toward front-end products on both new and used cars.

“Of course, dealers should be mindful of chargebacks with the record-high number of auto loan defaults,” Jones added. “Instead of front- or back-loading loans of buyers who may be more risky, it could be more profitable in the long run to build a relationship with them and help them develop their credit and buying power.”

To read the report in its entirety, click here.