Outstanding auto loans hit record $1.1 trillion

Outstanding auto-loan balances in the U.S. reached a record-high $1.1 trillion in the second quarter, a 7.1 percent rise, according to Experian's latest State of the Automotive Finance Market report released Thursday.

The source of the growth was loans to prime buyers, as subprime and deep subprime originations continued to fall in the second quarter.

Total subprime loan and lease originations dipped to 18.4 percent of the market, from 19.3 percent in the year-earlier quarter. Deep subprime origination share also fell slightly to 3.45 percent, vs. 3.54 percent a year earlier.

Prime and superprime share, on the other hand, grew from year-earlier levels. Superprime loan and lease originations made up 19.1 percent of the market, up from 17.9 percent. Prime loan and lease originations dominated the market with a 39.4 percent share, vs. 39.0 percent a year earlier.

Prime borrowers' origination share has grown in recent quarters. In line with that, the 30-day delinquency rate for all loans and leases has declined. In the second quarter, the 30-day delinquency rate was 2.20 percent, down from 2.22 percent a year earlier.

The 60-day delinquency rate, though, crept up to 0.67 percent from 0.62 percent a year earlier.

Consumers tend to prioritize a low monthly payment, and one path to reaching a desired payment is stretching out the loan term.

In the second quarter, the average new-vehicle loan term was 68.8 months, about two weeks longer than in the second quarter of 2016. The average used-vehicle loan term increased to 63.98 months, about a week longer than a year earlier.

For new-vehicle loans, 61-72 and 73-84 month terms each grew about 1 percentage point to 40.4 percent and 32.5 percent, respectively.

Meanwhile, 85-96 month loans increased, accounting for 1.25 percent of new-vehicle loans, vs. 0.95 percent a year earlier. The majority of new-vehicle loans in the 85-96 month segment are between 85 and 87 months, said Melinda Zabritski, Experian's senior director of automotive financial solutions.

On the used-vehicle side, 61-72 month loans increased to 41.6 percent from 41.1 percent a year earlier, and 73-84 month loans inched up to 17.7 percent from 16.1 percent.

Despite the loan-term extensions, the average monthly payment for a new vehicle reached a second-quarter high of $504, a $5 rise from the year earlier. The average monthly payment for used vehicles increased $1 to $365.

The percentage of new vehicles that are leased held steady at about 31 percent, but the average lease payment climbed $8 to $412 per month.