SCHAUMBURG, Illinois – (BUSINESS WIRE) – The auto finance market performed well in the first quarter, according to Experian Q1 2021 State of the automotive financing market report. The total open auto loan balance grew from $ 1.168 trillion in Q1 2020 to $ 1.288 trillion in Q1 2021. Much of the growth was driven by captive lenders, which experienced significant year-over-year growth. on the other, from 23.82% of the automotive financing market share to 28.02. % from Q1 2020 to Q1 2021.
Prime and super prime consumers continued to make up the largest portion of funding in the first quarter of 2021, accounting for 64.88% of total funding, up from 60.56% a year ago. In addition, the results show that major consumers are choosing to finance new vehicles in greater amounts. In the first quarter of 2020, 66.61% of prime consumers and 50.15% of super prime consumers switched to used vehicles, which decreased to 62.76% and 45.41% in the first quarter of 2021, respectively.
“The industry continues to be resilient, despite the persistence of some of the challenges caused by COVID-19, such as used inventory and global chip shortages, ”said Melinda Zabritski, senior director of automotive financial solutions at Experian. “While captives have seen notable growth, there should be continued opportunity for other players to increase their market share. Focusing on the data to better understand these trends will help lenders and dealers navigate the dynamic market. ”
Highlight geographic trends in automotive financing
While captives have increased their market share at the national level, examining the data at the regional level shows some differences. Captive lenders hold the majority of funding in the West (31.23%) and Northeast (44.34%), but banks took the lead for the Midwestern regions (33.26%) and of the South (30.83%).
In addition, there are regional differences in the types of vehicles financed. For example, the Ford F150 is the best-funded new vehicle in the Midwestern and Southern regions, compared to the Toyota RAV4 in the Western region and the Honda CR-V in the Middle East. These differences also impact the average MSRP in the regions, which is slightly higher in the Western region at $ 38,121, and the lowest in the Northeast region at $ 36,989.
Average loan attributes remain consistent
Average loan amounts and monthly payments have seen smaller increases year over year compared to recent quarters. The average new vehicle loan amount was $ 35,392 in the first quarter of 2021, up from $ 33,833 in the first quarter of 2020, while the average monthly payment increased by $ 7 year over year to $ 577. Used vehicle financing has seen similar changes, with the average loan size increasing from $ 20,689 in Q1 2020 to $ 22,375 in Q1 2021, while the average monthly payment increased from $ 394 in Q1 2020 to $ 413 as of Q1 2021. These higher loan amounts and average monthly payments can probably be attributed to consumer preferences for larger vehicles, with more than 56% of new financed vehicles belonging to the SUV segment.
“Affordability will likely remain a hot topic in the industry as we move forward into 2021, ”Zabritsky continued. “As the industry continues to navigate tight inventories and other potential disruptions, ensuring that lenders and dealers are able to meet the needs of consumers will require staying close to the data to make the most strategic decisions. ”
Additional results for the first quarter of 2021:
Leasing is down in Q1 2021: 26.66% of new vehicles were leased, compared to 30.68% in Q1 2020, while 8.56% of used vehicles were leased, compared to 9.83% in Q1 2020.
The average difference between a loan and a lease payment was $ 108 in Q1 2021.
Average credit scores have increased year over year, with the average new vehicle credit score increasing from 728 in Q1 2020 to 734 in Q1 2021, and from 655 to 663 for used vehicles in during the same period.
The average term of a new vehicle loan increased slightly from 69.03 months in Q1 2020 to 69.50 months in Q1 2021, while on the used side the increase was more noticeable, from 64.54 months to 65.74 months year-on-year.
To find out more, watch the full Q1 2021 State of the automotive finance market webinar report.
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