The Automotive Finance Market Continued to Move Forward at a Healthy Pace in Q1 2021, With Total Open Loan Balances Reaching $1.288 Trillion
Prime and super prime consumers continued to make up the largest portion of financing in Q1 2021, comprising 64.88% of total financing, compared to 60.56% a year ago. In addition, the findings show that prime consumers are opting to finance new vehicles in larger quantities. In Q1 2020, 66.61% of prime and 50.15% of super prime consumers opted for used vehicles, which decreased to 62.76% and 45.41% in Q1 2021, respectively.
“The industry continues to be resilient, despite the continuation of some of the challenges caused by COVID-19, such as used inventory and global chip shortages,” said
Highlighting geographic auto finance trends
While captives increased their market share on a national level, looking at the data on a regional level shows some differences. Captive lenders hold the majority share of financing in the West (31.23%) and Northeast (44.34%), but banks took the top spot for the Midwest (33.26%) and South (30.83%) regions.
In addition, there are regional differences in the types of vehicles being financed. For instance, the Ford F150 is the top financed new vehicle in the Midwest and South regions, compared to the Toyota RAV4 in the West region and the Honda CR-V in the Mideast. These differences also impact average MSRP in the regions, which is slightly higher in the West region, at
Average loan attributes remain consistent
Average loan amounts and monthly payments saw smaller increases year-over-year compared to recent quarters. The average new vehicle loan amount was
“Affordability will likely continue to remain a prominent topic in the industry as we move through 2021,” Zabritski continued. “As the industry continues to navigate tight inventory and other potential disruptions, ensuring that lenders and dealers are able to meet consumers’ needs will require staying close to the data to make the most strategic decisions.”
Additional findings for Q1 2021:
- Leasing was 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, down from 9.83% in Q1 2020.
The average difference between a loan and lease payment was
$108in Q1 2021.
- Average credit scores increased year-over-year, with the average new vehicle credit score increasing from 728 in Q1 2020 to 734 in Q1 2021, and increasing from 655 to 663 for used vehicles, in the same time frame.
- The average term for a new vehicle loan saw a slight uptick from 69.03 months in Q1 2020 to 69.50 months in Q1 2021, while on the used side the increase was more notable, from 64.54 months to 65.74 months year-over-year.
To learn more, watch the entire Q1 2021State of the Automotive Finance Market report webinar.
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