F&I and Showroom, October 2015

Auto Finance 18 F I and Showroom October 2015 extending loan terms to make their vehicles more affordable In fact data from the second quarter showed that the percentage of new vehicle leases reached an all time high It also revealed a greater percentage of consumers agreeing to used vehicle loans with terms in the 73 to 84 month range At the same time the gap between average loan amounts on new and used vehicles reached an all time high which translates into significant savings for buyers financing a used vehicle purchase What does this mean for the automotive retail market Well nothing is for certain but an increase in interest rates could leave budget conscious consumers feeling cold about longer loan terms in the long run And while the Federal Reserve decided against raising rates last month theres talk it may do so by years end So lets examine some of the trends from the second quarter to see if car buyers will continue on their current path or start running to the used car lot to get the savings they want Loan Balances Surge Overall vehicle financing is booming The total outstanding automotive loan balance increased 11 from a year ago to a record 932 billion in the second quarter Compared to 2013 outstanding balances are up 24 Additionally a record high 858 of consumers who purchased a vehicle during the quarter took out a loan or lease to do so Thats up from 85 in 2014 and 826 in 2012 Meanwhile the average amount financed for new vehicles grew by 1095 from a year ago to 28524 In comparison the amount financed for used cars rose by only 413 to 18671 And at 9853 the gap between new and used loan amounts represents the largest separation since Experian began publicly tracking auto finance data in 2008 Stretching Payments Despite escalating loan values consumers continued to make timely n The average amount financed for new and used vehicles rose by 1095 and 413 respectively to 28524 and 18671 n The average term for new and used vehicle loans stretched one month to 67 and 62 months respectively n The average monthly payment for new and used vehicles rose 16 and 6 respectively to 483 and 361 n Leasing accounted for 269 of all new vehicle transactions in the second quarter the highest level on record Q2 2015 by the Numbers 0 5000 10000 15000 20000 25000 30000 27429 28524 1095NewDeepSubprimeSubprimeNonprimePrimeSuperprimeSuperprimeUsedAverage Amount FinancedAverage New Amount FinancedQ2 2014 18258 18671Q2 2015Q1 2014Q1 2015Q2 2014Q2 2015 0 5000 10000 15000 20000 25000 30000 35000 24182 24627 26391 27330 28890 30142 28692 29874 24911DeepSubprimeSubprimeNonprimePrimeAverage Used Amount FinancedQ2 2014Q2 2015 0 5000 10000 15000 20000 25000 25860 13724 14371 15634 16102 18225 18745 19834 20248 19287 19680a 413aQ4 2012Q4 2013Q4 2014Balances By Lender TypeOutstanding Auto Loan Balances B Outstanding Auto Loan Balances B 0 200 400 600 800 1000FinanceCredit UnionCaptive AutoAll banks 257 284 222 178 116 211 157 96 135 313 230 208BankCaptiveCreditUnionFinance OtherYOY Change Loan BalanceBillions 0 5 10 15 20 25 30 35 31 25 24 9Q1 2014Q1 2015Average Monthly Payment 0 100 200 300 400 500 412 40513 2425 3637 4849 60Term Distribution0 10 20 30 40 50 60 70 80 901 2537 079 6470 Q4 2012Q4 2013Q4 2014Total Open Balances 0 200 400 600 800 1000 800 886 721Q2 2010Q2 2011Q2 2012Q2 2013Q2 2014Q2 2015Average Payment Di erence BetweenNew Used Car Loans 0 30 60 90 120 150 112 101 106 112 122 103NewUsedQ1 2012Q1 2013Average Term0102030405060708066616267Total LoanTotal LeaseOverall Financing0 20 40 60 80 100 8944 1260 8740 1056 Q1 2012Q1 2013New LeaseUsed LeaseLeasing by Type0 20 40 60 80 100 9622 309 9691 378 1 moa1 moa 0 5000 10000 15000 20000 25000 30000 27429 28524 1095NewDeepSubprimeSubprimeNonprimePrimeSuperprimeSuperprimeUsedAverage Amount FinancedAverage New Amount FinancedQ2 2014 18258 18671Q2 2015Q1 2014Q1 2015Q2 2014Q2 2015 0 5000 10000 15000 20000 25000 30000 35000 24182 24627 26391 27330 28890 30142 28692 29874 Used Amount FinancedQ2 2014Q2 2015 0 5000 10000 15000 20000 25000 25860 13724 14371 15634 16102 18225 18745 19834 20248 19287 2012Q4 2013Q4 2014Balances By Lender TypeOutstanding Auto Loan Balances B Outstanding Auto Loan Balances B 0 200 400 600 800 1000FinanceCredit UnionCaptive AutoAll banks 257 284 222 178 116 211 157 96 135 313 230 208BankCaptiveCreditUnionFinance OtherYOY Change Loan BalanceBillions 0 5 10 15 20 25 30 35 31 25 24 9Q1 2014Q1 2015Average Monthly Payment 0 100 200 300 400 500 412 40513 Distribution0 10 20 30 40 50 60 70 80 901 2537 6470 Q4 2012Q4 2013Q4 2014Total Open Balances 0 200 400 600 800 1000 800 886 721Q2 2010Q2 2011Q2 2012Q2 2013Q2 2014Q2 2015Average Payment Di erence BetweenNew Used Car Loans 0 30 60 90 120 150 112 101 106 112 122 103NewUsedQ1 2012Q1 2013Average Term0102030405060708066616267Total LoanTotal LeaseOverall Financing0 20 40 60 80 100 8944 1260 8740 1056 Q1 2012Q1 2013New LeaseUsed LeaseLeasing by Type0 20 40 60 80 100 9622 309 9691 378 1 moa1 600700800Q42009Q42008Q42007Q42010Q42011Q42012Q42013Q42014Q12009Q12008Q12010Q12011Q12012Q12013Q1 New ScoreAverage Used Score711726736732727723715712640647657659653650646648Average Loan Credit Scores by Vehicle Type10 15 20 25 30 35 Q22010Q22011Q22012Q22013Q22014Q22015Lease of New FinancingLease of All NewLease of Total2379 1049 1900 2362 1910 1066 2440 2010 1136 2764 2340 1296 3016 2563 1446 3138 2692 1482 Consumer LeasingPercentage 20 40 60 80 100