Experian's Latest 2016 Car Financing And Credit Score Trend Study

Prime and subprime customers

Findings from the second quarter 2016 Automotive Finance Report reveals that while both 30- and 60-day loan delinquencies were up slightly, the combined subprime and deep-subprime share of new and used auto loans and leases dropped from 23.3 percent in the second quarter 2015 to 22.8 percent in second quarter 2016. Overall, automotive lenders made more than five times as many loans to super-prime customers (17.9 percent of total auto loans and leases) as to deep-subprime customers (3.5 percent of total auto loans and leases).

Thirty-day delinquencies were up from 2.19 percent in second quarter of 2015 to 2.22 percent in second quarter of 2016, while 60-day delinquencies moved from 0.56 percent to 0.62 percent in the same time period.

Leasing, used vehicle sales continue to gain momentum
Leasing continued its strong growth as the share of new vehicles leased jumped from 26.92 percent in second quarter of 2015 to a record-high of 31.44 percent in the second quarter of 2016. Even used vehicle leasing, which accounts for a small slice of the lease market, experienced growth, moving from 3.26 percent share in the second quarter of 2015 to 3.71 percent in second quarter of 2016.

Used vehicle loans also grew to record heights in terms of average dollar amount and overall loan share during the quarter. The average used vehicle loan reached an all-time high of $19,101 in second quarter of 2016, up from $18,671 in Q2 2016. Used vehicle loans also reached a new peak, accounting for 55.61 percent of all vehicle loans during second quarter 2016.

The growth was driven by jumps in prime and super-prime consumers choosing used vehicles. Specifically, 43.3 percent of super-prime consumers selected a used vehicle, which represents a 10 percent increase over 2015. For prime consumers, 59.9 percent chose used, a 6.6 percent increase over the previous year. This shift also helped push the average credit score for a used vehicle loan from 645 in second quarter of 2015 to 648 in second quarter of 2016.

Other second quarter of  2016 findings:

• The average monthly payment for a used vehicle was $364, up from $361 in second quarter 2015
• The average monthly payment for a new vehicle loan was $499, up from $483 in the second quarter 2015
• The average new vehicle loan amount was $29,880, up $1,356 from the second quarter of 2015 average new vehicle loan amount of $28,524
• Average customer credit scores for new vehicle loans fell slightly, from 709 in second quarter of 2015 to 708
• The average loan term for a new vehicle went from 67 months in second quarter of 2015 to 68 months
• (Source: Experian Automotive)