According to recent data from Experian Plc, an information provider, a record number of U.S. consumers are taking out loans to purchase cars, especially those who are buying used vehicles.
In the second quarter of 2014, 85% of the new car purchases and 53.8% of used car sales were financed through loans. Compared to 2013, this means a 0.5% increase and a 0.9% growth, respectively. Since last year’s second quarter, the average used vehicle loan rose 1.9% to $18,258 and the average monthly payment on used cars grew 1.1% to $355, both being all-time highs.
Melinda Zabritski, senior director of automotive finance for Experian, stated that “more and more consumers, especially those that are credit challenged, are turning to the used vehicle market as a viable option to purchase their next car.”
Most consumers turned to banks for the purchase of their used cars, as 35.6% of used vehicles sales were financed through bank loans. Regulators have recently become more concerned about the banks’ willingness to lengthen terms on car loans, lend money to borrowers with lower credit scores and give out loans that are actually larger than the vehicles’ worth. Wells Fargo & Co stays the largest U.S. auto lender in the second quarter of 2014 with a market share of 5.75 %, down from 5.89% in 2013, as Capital One Financial Corp goes past JPMorgan Chase & Co to become the third largest U.S. auto lender after Ally Financial Inc.
By Gabriela Florea