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American Car Buyers Paying Record Prices, Going Deeper Into Debt

Leasing soars as motorists look to hold costs down, says new study.

by on Mar.03, 2016

American motorists are paying more for their vehicles and borrowing more.

Even as U.S. car sales surge to record levels, a new study shows that American motorists are spending more than ever for their vehicles – with loan levels also reaching new records.

Searching for a way to offset rising prices, a growing number of buyers are turning to leasing, according to Experian Automotive which issued its quarterly “State of Automotive Financing” report on Thursday.

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“People shop for vehicles largely based on monthly price, and right now, average dollar amounts for new vehicle loans are soaring,” said Experian’s auto credit director Melinda Zabritski.

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More U.S. Auto Buyers Falling Behind on Payments

But that’s “not yet a cause for concern.”

by on Feb.09, 2016

Car dealers have been seeing record numbers of shoppers - but loan delinquencies are rising, too.

More expensive loans aren’t the only reason for automakers to worry, industry analysts are warning. There are signs that more consumers are having trouble handling the loans they’ve already taken out.

With a record number of Americans buying new vehicles last year, lenders logged a record amount of debt on their books. And a growing number of those buyers are falling behind on payments, according to Experian Automotive. While 30-day delinquencies are actually down, the number of motorists two months behind on payments grew sharply.

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“Given that we’ve seen an increase in loans to subprime and deep-subprime consumers, it’s natural to see a slight uptick,” explained Melinda Zabritski, senior director of automotive finance for Experian. “Although not yet a cause for concern, the industry should keep an eye on this metric to see how it trends in the quarters to come.”

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New Vehicle Registrations Guarantee Record 2015 Sales

Crossover vehicles leading the sales charge.

by on Dec.14, 2015

New vehicle registrations are at record levels in 2015, suggesting the old sales record of 17.4 million will fall.

The news has been filled with all types of statistics to quantify the number of new vehicles have been sold this year. Well, the simplest may be this: in the last 12 month, 17 million new vehicles have been sold: the best result since 2006.

Experian Automotive released the number of new vehicle registrations from Nov. 1, 2014 through Oct. 31, 2015 in the U.S. and the number matches the record result from 2006, and supports the assertion that 2015 will set a new single-year mark.

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“It’s encouraging to see new registrations return to prerecession levels, with lower interest and higher employment rates driving vehicle demand,” said Brad Smith, Experian’s director of automotive market statistics. “While I’m sure the auto industry would like to continue this growth annually, it is important to continually monitor data trends and economic indicators to identify shifts in demand and adjust business strategies accordingly.” (more…)

Automakers Bankrolling Half of New Car Purchases

Record auto sales means big money for financing arms

by on Dec.02, 2015

Car buyers are using the captive finance arms of automakers more than half the time for their vehicle financing.

The soon-to-be-record-setting automotive sales year is not only benefitting the bottom line for automakers, but also their captive finance arms that are now handling more than half of all new vehicle sales.

The automaker’s finance companies bankrolled 51.6% of new vehicle loans in the third quarter of 2015, up from 36.8% in Q3 2011. This represents the largest marketshare of new vehicle financing for captives since the recession of 2008, according to Experian Automotive’s State of Automotive Finance report.

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“Captive lending has made a comeback since suffering a steep drop-off caused by declining new sales and lender-type shifts during the recession,” said Melinda Zabritski, Experian’s senior director of automotive finance. (more…)

Green Car Purchasers More Likely to Pay with Green

Buyers used cash more often for alternative fuel vehicle, study shows.

by on Apr.22, 2015

The Toyota Prius was the most registered green car last year, according to Experian.

If you’re looking to buy a green vehicle, it appears you’re more likely to simply drop a bunch of green to do it, according to a recent study.

Buyers of alternative fuel vehicles last year were more likely to pay cash for their EV or hybrid than those purchasing a vehicle with a traditional internal combustion engine, said Experian Automotive.

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Sales of those vehicles have been in the decline through the first quarter of this year, but those buying them are pretty much a sure thing for automakers. More than 18% of consumers that purchased a “Green” vehicle paid in cash, compared to 15.2% of those that purchased a gas-powered vehicle, the company said. (more…)

Lenders Cutting Back on Subprime Loans

Credit challenged getting fewer loans and less money.

by on Sep.03, 2014

Lenders are loaning less money, less often to subprime and deep subprime buyers these days.

While auto sales sizzled in August and have been brisk for the year, the lenders helping to move that metal are no longer relying on the subprime buyers to keep the good times rolling.

The percentage of new vehicle loans going to consumers in the subprime and deep subprime segments was at 15.1% in Q2 2014, down from 22.1% in Q2 2013, according to Experian Automotive. Subprime buyers have credit scores ranging from 619 down to 550 while deep subprime is anyone below 550.

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The numbers are still higher than the low of 10.2% during the depths of the recession in 2009, the current figures are still well below the prerecession level highs of 16.6% in Q2 2008 and 19.9% in Q2 2007, the company reported. (more…)

Auto Sales Soar – But So Does Auto Loan Debt

Sub-prime lending and delinquencies raise concerns.

by on Aug.20, 2014

Sub-prime lending has sharply increased - though it remains lower than before the recession.

Car sales may be soaring to their highest levels since the depths of the recession but, in the process, U.S. motorists are running up record auto loan debts.

The combination of rising car prices and a negligible growth in wages has only compounded the problem, buyers going deeper into debt to drive off showroom lots. Outstanding auto loans hit an all-time record of $839.1 billion during the second quarter, a whopping 11.7% year-over-year increase, according to debt tracking service Experian Automotive.

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It marks the 13th consecutive quarter auto loan has increased, according to a separate report by the Federal Reserve Bank of New York. Overall, outstanding household debt was essentially flat, the Fed noted.

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Auto Buyers Loading Up on Loans as Monthly Payments Hit Record

Buyers also extending loans to record levels.

by on Jun.02, 2014

While sales continue to rebound, consumers are borrowing more to get into a new vehicle.

U.S. auto buyers are paying more than ever and stretching out their loans to record lengths in order to make their monthly payments, according to a new study.

Consumers are also turning to leases in record levels to help cut their costs, reveals the latest State of the Automotive Finance Market, from the data tracking firm Experian Automotive.

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“Consumers are really relying on financing as the price of new vehicles continues to move higher,” said Melinda Zabritski, Experian’s senior director of automotive credit. “As the cost of purchasing a new vehicle continues to rise, consumers clearly are stretching the loan term to help lower monthly payments, keeping them at a manageable level.”

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Leasing Regains its Appeal

With increased availability, over one in four American car buyers opt to lease.

by on Jun.28, 2013

Chevy has turned to super-low lease rates to help spur lagging Volt sales.

Looking for a quick way to cut the cost of buying a new car? You’re not alone, and that’s why a growing number of American motorists are opting to lease, rather than buy.

If that sounds a note of déjà vu, no surprise.  Leasing was big news for U.S. auto buyers in the years leading up to the economic crash.  For luxury brands, in particular, leasing accounted for as much as 80% of their sales. Then the bottom fell out and some makers, notably General Motors, pulled out of leasing entirely.

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As credit has loosened, auto buyers and automakers alike have rediscovered leasing’s advantages and the numbers are once again climbing – but so is the number of lease customers who find themselves wanting to get out of their vehicles sooner than expected, industry observers note.

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Midsize Cars Dominating the Market

Camry tops sales charts, with Ford F-Series close behind – but hybrids are on a tear.

by on Sep.11, 2012

The Toyota Camry led the market for the first half.

If you’re wondering what impact rising fuel prices have had on automotive sales this year consider that the Toyota Camry has displaced the perennially best-selling Ford F-Series at the top of the chart.

So-called “midrange” cars dominated the market during the first half of the year, according to a new study of vehicle registrations by Experian Automotive.  In fact, five of the top 10 vehicles were midsize sedans, including not only Camry but the Ford Fusion and Nissan Altima.  There also were two compact sedans and a compact SUV.

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But don’t rule out big trucks. The F-Series is only a hairsbreadth behind Camry and could yet land as the nation’s best-seller for the full year, according to Experian, continuing a nearly three-decade-long domination.  Rounding out the top 10 was another full-size pickup, the Chevrolet Silverado. And while they didn’t come close to the top, hybrid vehicles definitely made some significant gains early in the year.

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