As we near the close of another year, Experian has issued its State of the Automotive Finance Market report for the third quarter of 2019, showing loan metrics are up across the board, including loan amounts, terms, interest rates, and outstanding balances. Here’s what they found, and what this means for your car dealership.
Q3 2019 Sees Increase in Used Vehicle Sales
One of the biggest takeaways from third quarter data is that used car financing has continued to grow. Financing for used vehicles increased 2.4% year-over-year, climbing to 55.15%.
This shift is being driven by prime customers, who, combined with super prime consumers, now make up over 50% of the used car finance market.
Experian’s Senior Director of Automotive Financial Solutions, Melinda Zabritski, attributes the rise to the realization that used vehicles can be an optimal choice, especially as more late models offer similar features to new cars, but at a lower price point.
“Understanding these trends can help lenders and dealers ensure they have the right options available for consumers,” Zabritski said.
In addition to prime and super prime consumers shifting their interest to used vehicles, they’re also on the move when shopping for these cars – increasingly opting to shop at independent dealerships. This shift boosted independent dealer loans in both segments, and accounted for a 37.92% share of financing, up from 34.87% in Q3 2018.
Increases Seen Across Several Segments
The third quarter of 2019 saw increases not only in used vehicle sales, but in several other market segments. Here are some of the key findings from Experian’s report:
- Loan amounts increased in both the new and used segments. The average cost of a new car rose to $32,480, up 3.8%, while used auto loans increased to an average of $20,466, up 2.3% year-over-year.
- With higher loan amounts come higher payments. The average new vehicle payment rose $20 to $550, while the average used car payment increased $12 to $393 a month.
- Along the same lines, average loan terms also increased across almost all segments, the exception being franchised used dealerships. The average new auto loan term increased to approximately 69 months, while the average used loan term approached nearly 65 months. Both are record highs.
- Interest rates are also up across all segments, averaging 5.96% for new and 9.57% for used vehicles.
- Not to be left out, the average credit score of buyers is also increasing in both new and used segments. Q3 2019 saw the average new car buyer with a credit score of 725, and the average used vehicle buyer at a 662 credit score.
- Outstanding automotive loan balances rose as well, reaching a total of $1.22 trillion.
- At the same time, 30-day delinquencies dropped for all lenders, with the exception of finance companies, which remained stable at 2.25%.
Helping You Focus on the Growing Used Car Market
With all numbers trending up, your store can use this data to focus on the sales that consumers are leaning toward. Right now, the numbers point to used cars.
In order to stay competitive in the used vehicle market, your store has to stand out from the crowd, with your inventory viewable by prospects that are serious about coming in to buy from you. Auto Credit Express can help with our used car leads.
Our exclusive partnership with CarsDirect Connect allows consumers access to your inventory 24/7 on our vast network of over 130 automotive websites, connecting you to millions of used car shoppers. With optimized and easy-to-navigate listings, your leads are prepped for maximum conversion.
Want to capitalize on even more of the market? We offer new car leads through CarsDirect Connect as well. Plus, we’ve been an award-winning automotive subprime lead generator for over 20 years.
To let our experience work for you, or to see what other exciting services we have in store for you, call us at 888-535-2277, or fill out our online contact form and we’ll reach out to you. Don’t wait to grow your bottom line, call us today!