New Vehicles Being Financed at a Higher Rate by Consumers With Strong Credit in Q4 2020, Experian Finds
04 Marzo 2021 - 02:00PM
Business Wire
Research shows increase in consumers financing
electric and hybrid vehicles
Though affordability remains a concern in the automotive
industry, Experian found consumers with strong credit are shifting
away from used vehicles, back into financing new vehicles.
According to Experian’s Q4 2020 State of the Automotive Finance
Market report, 44% percent of super prime consumers selected used
vehicles in Q4 2020, down from 47.03% in Q4 2019. Similarly, 60.38%
of prime consumers chose used, compared to 63.75% during the same
period last year.
“The events of 2020 disrupted the automotive industry and we’ve
seen some consumers shift away from patterns that have been
cemented over previous quarters such as opting for used vehicles,”
said Melinda Zabritski, Experian’s senior director of automotive
financial solutions. “While we can likely attribute some of the
change to stimulus checks, carry-over incentives and tight
inventory, we find ourselves in uncharted territory. Leveraging
data to better understand patterns and trends will help lenders and
dealers make the most strategic decisions in the days to come.”
Overall, Experian observed similar trends and patterns to
previous quarters. Total originations for prime and super prime
consumers increased in Q4 2020, reaching 44.24% and 22.13%,
respectively. Conversely, total originations were down for subprime
segments: subprime originations made up 14.35% and deep subprime
dipped below 2% for the first time at 1.98%.
Electric and hybrid vehicles grow share of financing
Electric and hybrid vehicles have steadily gained popularity in
recent years. In Q4 2016, electric and hybrid vehicles made up less
than 3% of financing, but that has more than doubled in the last
five years. In Q4 2020, electric and hybrid vehicles represented
6.72% of vehicle financing.
Taking a closer look at what is being financed, Toyota leads
with the greatest market share of electric and hybrid vehicles, at
38.57%, followed by Tesla at 25.82%. Rounding out the top five are
Honda (8.4%), Lexus (5.47%) and Ford (3.72%). The Tesla Model Y was
the most popular electric or hybrid model financed in Q4 2020, at
13.3%, with the RAV4 coming in at number two at 11.19%.
While electric vehicles tend to have a higher average monthly
payment than hybrid vehicles, both saw slight increases in Q4 2020.
The average monthly payment for electric vehicles increased from
$671 in Q4 2019 to $689 in Q4 2020, while hybrids increased from
$509 to $529 over the same period.
Average loan amounts and monthly payments continue to
rise
Overall, average vehicle loan amounts and monthly payments
continue to rise, likely driven by consumers’ continued preference
for larger vehicles such as pickups and SUVs. In fact, more than
50% of new vehicles financed in Q4 2020 were small and mid-sized
SUVs.
The average loan amount for a new vehicle increased nearly
$2,000 year-over-year to reach $35,228 in Q4 2020, while the
average monthly payment increased $13 to $576 over the same period.
Similarly, the average loan amount for used vehicles grew from
$20,824 to $22,467 year-over-year, while average monthly payments
increased $18 to surpass $400 for the first time, reaching $413 in
Q4 2020.
“With the increases in average loan amounts and payments,
affordability will continue to be an important topic to pay
attention to, particularly as market conditions continue to develop
in 2021,” Zabritski continued. “To keep the industry moving
forward, lenders and dealers need to rely on data to ensure that
they have the right options to fit consumers’ needs.”
Additional findings for Q4 2020:
- Total open automotive loan balances grew 2.8% year-over-year,
reaching $1.27 trillion in Q4 2020.
- Average loan terms continued to increase for both new and used
vehicles in Q4 2020, at 69.68 months for new vehicles and 65.58 for
used vehicles.
- Interest rates dropped in Q4 2020. The average interest rate
for a new vehicle loan dropped from 5.25% in Q4 2019 to 4.31% in Q4
2020, while the average interest rate for used vehicles dropped
from 9.05% to 8.43% in the same time frame.
- Captive lenders saw the largest amount of growth in Q4 2020,
from 26.22% in Q4 2019 to 30.14% in Q4 2020.
To view the entire Q4 2020 State of the Automotive Finance
Market report webinar, visit
https://www.experian.com/automotive/automotive-webinars.html.
About Experian
Experian is the world’s leading global information services
company. During life’s big moments – from buying a home or a car,
to sending a child to college, to growing a business by connecting
with new customers – we empower consumers and our clients to manage
their data with confidence. We help individuals to take financial
control and access financial services, businesses to make smarter
decisions and thrive, lenders to lend more responsibly, and
organizations to prevent identity fraud and crime.
We have 17,800 people operating across 45 countries and every
day we’re investing in new technologies, talented people and
innovation to help all our clients maximize every opportunity. We
are listed on the London Stock Exchange (EXPN) and are a
constituent of the FTSE 100 Index.
Learn more at www.experianplc.com or visit our global content
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the Group.
Experian and the Experian marks used herein are trademarks or
registered trademarks of Experian and its affiliates. Other product
and company names mentioned herein are the property of their
respective owners.
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version on businesswire.com: https://www.businesswire.com/news/home/20210304005057/en/
Jordan Takeyama Experian Public Relations 1 714
830 7561 jordan.takeyama@experian.com
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