F&I and Showroom, October 2015

Auto Finance 20 F I and Showroom October 2015 payments In the second quarter the 30 day delinquency rate dropped to its lowest level for a second quarter period in five years falling from 237 in the year ago quarter to 232 That wasnt the case for the 60 day delinquency rate which increased slightly from a year agos 0603 rate to 0607 Whats keeping monthly payments affordable and delinquency rates in check are loan terms which continued to stretch during the second quarter On a year over year basis the average term for new and used vehicles rose by one month to 67 and 62 months respectively But the longer terms didnt stop average payments from inching up as well During the second quarter the average monthly payment for new vehicles rose by 16 from a year ago to 483 while the monthly payment for used vehicles rose by 6 to 361 The rise in average monthly payment pushed car buyers to leasing which accounted for 269 of all new vehicle transactions during the second quarter the highest level on record Leasing also seemed to work as a budgeting tool for consumers during the quarter as the average lease payment dropped from 407 in the year ago period to 394 The average lease term for new vehicles remained consistent at 36 months but the 37 to 47 month term category did increase 18 from a year ago On the surface it appears consumers are willing to also stretch lease payments And while used car leasing accounted for a small portion of the market at 33 it has increased 12 from a year ago and 27 from two years ago Payment Gap Widens With the average dollar volume of loans growing it makes sense that average payments are growing as well When car buyers purchase a new or used vehicle they look at the monthly payment as a barometer of what they can afford However the gap between monthly loan payments on new and used vehicles reached a second quarter high of 122 With that significant of a gap you may find some customers beginning to gravitate toward the used vehicle market Off the Lot The automotive finance industry is finding ways to keep the metal moving with stretching terms and leasing providing payment relief to consumers But will that last As long as delinquencies stay in check lenders are likely to keep working with retailers and customers to find creative ways to make cars affordable The bigger question is will consumers continue opting for 72 or 84 month loans If interest rates rise that could be a tough sell especially when savvy consumers see how much they are paying in finance charges over the life of their longer loan That more than anything could push more consumers to the used car lot Melinda Zabritski serves as senior director of automotive credit for Experian Automotive E mail her at melinda zabritski@ bobit com 0 100 200 300 400 500 467 483 16NewDeepSubprimeSubprimeNonprimePrimeSuperprimeSuperprimeUsedAverage Monthly PaymentAverage New 2014 355 361Q2 2015Q2 2014Q2 2015 0 100 200 300 400 500 600 484 509 491 512 484 504 470 484 446DeepSubprimeSubprimeNonprimePrimeAverage Used PaymentQ2 2014Q2 2015 0 50 100 150 200 250 300 350 400 456 373 381 372 378 355 363 347 351 347 351a 6a 0 100 200 300 400 500 467 483 16NewDeepSubprimeSubprimeNonprimePrimeSuperprimeSuperprimeUsedAverage Monthly PaymentAverage New PaymentQ2 2014 355 361Q2 2015Q2 2014Q2 2015 0 100 200 300 400 500 600 484 509 491 512 484 504 470 484 Used PaymentQ2 2014Q2 2015 0 50 100 150 200 250 300 350 400 456 373 381 372 378 355 363 347 351 347 6a New Amount FinancedQ2 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 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 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 LoanTotal LeaseOverall Financing0 20 40 60 80 100 8944 1260 8740 1056