Experian: Auto Loan Interest Rates Fall to All-Time Low
According to the latest report from Experian Automotive, interest rates for auto loans fell to an all-time low in the third quarter, while the average amount financed reached its highest level since 2008.
SCHAUMBURG, Ill. — Interest rates for new-vehicle loans dropped to 4.27 percent, the lowest rate since the organization began publicly reporting the data in 2008, Experian Automotive reported this week. And according to its latest State of the Automotive Finance Market report, car buyers took advantage, with the average amount financed for a new vehicle reaching its highest point since 2008.
According to the report, the average amount financed on new vehicles increased to $26,719 in the third quarter from $25,963 in the year-ago quarter. As for used vehicles, the average amount financed increased from $17,577 in the year-ago quarter to $17,900.
“The third quarter of 2013 proved to be a good time to purchase a new vehicle, particularly for consumers who buy based on their monthly payments,” said Melinda Zabritski, senior director of automotive credit for Experian Automotive. “With loan rates at historic lows, car shoppers were able to take advantage and get a little more vehicle for their monthly payment. It’s a win for everyone, as shoppers perceive they are getting better deals and manufacturers and dealers are boosting sales.”
The average interest rate was 4.27 percent in the third quarter. Combined with slightly lower payment terms, which increased one month for a year ago to 65 months helped keep monthly, the two metrics kept monthly payments relatively flat. The average monthly payment for new vehicles during the period was $458, up $6 from a year ago. For used vehicles, average monthly payments remained flat at $350.
Leasing continued to be a significant part of the vehicle finance mix, accounting for 27.22 percent of all new vehicles financed during the third quarter. While up from the 24.4 percent share recorded a year ago, leasing’s share was down slightly from 27.64 percent share recorded in the second quarter 2013. The average monthly lease payment also dropped, inching down from the $409 average recorded a year ago to $404.
Additionally, the share of new-vehicle loans falling in the below-prime categories rose slightly, inching up from 24.84 percent in the year-ago quarter to 26.04 percent. For used vehicles, nonprime, subprime and deep subprime loans held a 54.95 percent share of the market, up slightly from 54.43 percent in the year-ago quarter.
Looking at credit scores, Experian Automotive recorded a two-point drop for new-vehicle credit scores (755 to 753). The average credit score for used vehicles remained flat year over year at 668.
“The automotive lending market seems to have stabilized in the third quarter,” Zabritski said. “Subprime lending is still growing slightly, but is still well below prerecession levels in the highest risk segments, and its growth rate has slowed considerably. It seems as though lenders are approaching their ceiling for how much risk they are willing to take.”
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