Auto Loan and Lease Activity Slows as Balances Grow
Equifax analysts say U.S. auto loan and lease originations declined 0.6% and 3.9% year-over-year in the first half of 2019, but balances for new vehicle loans were up 2.6%.
Sales of trucks and SUVs, such as the Audi Q7, have helped auto finance sources grow balances despite fewer originations.
Photo courtesy Audi USA
ATLANTA — U.S. banks, finance companies, and credit unions funded 12.3 million auto loans in the first half of 2019, totaling $286.2 billion and growing outstanding balances by 2.6% year-over-year. But the number of loan originations declined by 0.6%, and the number of new leases fell by 3.9%, Equifax reports.
New loans and leases for subprime borrowers were down 3.1% and 7.2%, respectively, compared with the first half of 2018. Subprime loan balances grew by 1.3% while subprime lease balances declined by 4.1%. In September, Equifax reported subprime auto loans accounted for 22.7% of the total market in April, an eight-year low.
Read: Subprime Fell to Lowest Share Since 2011 in April
Average loan amounts for all purchases increased 6.6% to $24,134 and the cost of a new lease increased 1.9% to an average of $16,779.
“According to this data, the number of loans originated is relatively stable, yet loan balances continue to increase. This is slightly different from leases, which are showing a falling number of lease originations but a more moderate rise in balances issued,” Jenn Reid, Equifax’s vice president of automotive marketing and strategy, said in a release.
“These numbers indicate that the automotive market in financing originations has been stable while the amount financed has increased throughout 2019 heading into the final months of the year,” Reid added. “The rising balances are most likely a result of a stronger shift to trucks/SUVs when shopping.”
More Auto Finance
Dealerships Are Paying the Price for Extended Car Loans
Growing negative-equity scenarios mean such lengthy terms should be addressed in a forward-looking way to make them work for the dealer and the consumer down the road.
Read More →
Trade-Ins in Negative Equity Reach New Heights
As such trade-ins rise in frequency, so do monthly loan payment amounts and interest rates, according to second-quarter data compiled by Edmunds.
Read More →
Auto Credit Plentiful
June numbers show lenders are readily granting access, including to risky borrowers, as consumers leverage themselves to take on high prices.
Read More →
Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Porsche Financial Services Shifts Structure
After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.
Read More →
Tariffs Could Raise Insurance Premiums
As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.
Read More →
Smaller Loans, Longer Terms
The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.
Read More →
New Cars a Tad More Affordable
May averages show that combined circumstances gave auto consumers slightly better buying power for the month, though average prices were up year-over-year.
Read More →
First-Quarter Sees Long Auto Loan Growth
Experian data show more consumers are tapping the method, along with refinancings, to afford buying. Meanwhile, subprime borrowers are getting more access.
Read More →
Mastering Credit Friction
In this video, Josh Krach explains how to turn credit friction into an advantage.
Read More →