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Equifax: Vehicle Sales Down, Borrowing Up

Car buyers were financing more at the midway point of 2018 than they did in 2016, when record new-vehicle sales were made, according to new data from Equifax.

by Staff
October 17, 2018
Equifax: Vehicle Sales Down, Borrowing Up

 

3 min to read


Borrowing for auto loans and leases is well ahead of the pace set in the record sales year of 2016, according to a new report from Equifax. Photo by nattanan23 via Pixabay

ATLANTA — Car shoppers were financing more at the midway point of 2018 compared to the record-setting sales in 2016, according to the latest figures from Equifax. The bureau reported that 14.4 million auto loans and leases totaling $311.7 billion have been originated as of the end of June. This is a 1.2% increase in accounts and a 2.8% increase in balances compared with the same time last year.

Analysts said 12.4 million auto loans totaling $279.2 billion have been originated year-to-date. This is a 1.6% increase in accounts and a 3.5% increase in balances over this time last year. Auto loans currently represent 86.1% of all auto account originations and 89.6% of auto origination balances. They also noted that 2.78 million auto loans have been originated YTD to consumers with a VantageScore 3.0 credit score below 620, which are generally considered subprime accounts. This is a 1.6% decrease from June 2017. These newly-issued loans have a corresponding total balance of $49.9 billion, a 0.9% decrease year-over-year.

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Through June, 22.5% of auto loans were issued to consumers with a subprime credit score, and they accounted for 17.9% of origination balances. In 2017 YTD the account share was 23.3% and balance share was 18.7%. The average origination loan amount for all auto loans issued in June 2018 was $22,899. This is a 2.2% increase over June 2017. The average subprime loan amount was $18,205. This a 1.9% increase compared to June 2017.

Additionally, 1.99 million auto leases totaling $32.4 billion have been originated year-to-date, representing a 1.2% decrease in accounts and a 2.9% decrease in balances from this time last year. Auto leases accounted for 13.8% of all auto accounts originated through June, and 10.4% of balances.

180,500 auto leases have been originated YTD to consumers with a VantageScore 3.0 credit score below 620. These are generally considered subprime accounts. This is a 5.4% decrease from June 2017. These newly-issued leases have a corresponding total balance of $3.12 billion, a 5.6% decrease year-over-year. Through June, 9.1% of auto leases were issued to consumers with a subprime credit score. Through June 2017, the share was 9.6%.

The average origination balance for all auto leases issued in June 2018 was $16,617. This is a 0.83% decrease from June 2017. The average subprime lease amount was $17,629, a 0.05% increase over a year ago. Analysts noted that lease origination values reflect the contract amounts only and exclude expected vehicle residual values.

“Despite a pace of sales that’s slightly off the record-setting mark of 2016, car shoppers are financing more through the midway point of this year, a clear reflection of the continued increase in the price of cars and trucks,” said Gunnar Blix, deputy chief economist for Equifax. “We’re also continuing to see strong sales activity for used vehicles, with the first half of 2018 on pace with what we saw in 2017, as shoppers realize they can find bargains on slightly used, off-lease vehicles that are readily available.”

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