With one quarter remaining in the sales year, the U.S. auto industry has already set records in lease penetration, new-vehicle financing levels and the number of consumers taking out longer loans, Experian data show.
Leasing made up 26.93 percent of all new-vehicle transactions in the third quarter, compared with 26.92 in the second quarter and 24.71 percent a year earlier, according to Experian Automotive’s State of the Automotive Finance Market report released today. The lease penetration level was the highest it’s been since Experian started tracking data in 2006.
J.D. Power also sees lease rates tracking at a record level in 2015. It released data last month that showed leasing accounted for 27.7 percent of new-vehicle sales this year through the first two weeks of November.
“As the price for a new or used vehicle continues to rise, leasing has become a more viable financing option for consumers looking to maintain an affordable monthly payment,” Melinda Zabritski, Experian’s senior director of automotive finance, said in a statement.
The average monthly payment for a lease was $398, a $1 increase from the year-earlier period. Consumers can save an average of $84 per month when they lease, Zabritski said.
But they “should make sure leasing fits their lifestyle,” she warned. “Oftentimes there are mileage caps and other considerations that consumers should familiarize themselves with before entering into a leasing agreement.”
It’s not just leasing that’s increasing; auto loan balances are rising, too, as consumers keep pace with escalating vehicle prices.
Ford Motor Co.’s average transaction price in September, for example, rose $2,100, or 6.6 percent, compared with the year-earlier month, according to data provided from the Power Information Network.
The percentage of new vehicles financed reached a record 87 percent in the third quarter, Experian said. On average, consumers financed $28,936 on a new vehicle, up $1,137 from the year-earlier period.
For used vehicles, 55 percent were financed. The average amount financed on used vehicles was $18,866, a $290 increase from the year-ago period.
As consumers’ loan amounts grow, they are stretching their loan terms to help manage monthly payments, Experian said.
More loans at longer terms
Long loan terms -- 73 to 84 months -- increased for both new and used vehicles in the third quarter. New-vehicle loans in the segment reached a third-quarter high of 28 percent, a 17 percent jump from the year earlier. Used vehicle loans in the 73- to 84-month range reached an all-time high of 16 percent, a 12 percent climb from the year earlier.
The average loan term for both new and used vehicles, however, extended one month from the year earlier. New-vehicle loan terms reached 67 months on average in the third quarter, while used vehicle terms averaged 63 months.
The percentage of customers with new- and used- vehicle loans between 61 and 72 months reached an all-time high, Experian said. Forty-four percent of new-vehicle buyers took out 61- to 72-month loans, a 3.2 percent increase from the year earlier. For used vehicles, 41 percent of consumers financed for 61 to 72 months.