Equifax Reports Auto Loan and Lease Balances Top $1 Trillion

According to the latest Equifax National Consumer Credit Trends Report, the total amount of outstanding balances on automotive loans and leases has crossed the $1 trillion mark with finance companies growing originations more quickly than commercial banks.

As of June 2015, the total outstanding balances on auto loans and leases comes in at $1.021 trillion, a year-over-year increase of 10.5%. Additionally, the number of outstanding accounts has increased 8.0% from a year ago to 73.7 million.

"Strong sales numbers in both the new-car and used-car markets, coupled with the availability of quality financing for consumers are a few of the main reasons the industry has reached the one trillion dollar mark," said Dennis Carlson, Deputy Chief Economist at Equifax. "It clearly reflects that the improving economy has provided the impetus for consumers to replace their aging vehicles and begin to satisfy their pent-up auto demand."

While auto loan balances through June 2015 are growing at relatively similar rates for both banks and finance companies (10.1% and 10.2% year-over-year respectively), the latter is considerably outpacing the former in auto leasing. The report found that finance company lease portfolios are more than seven times the size of bank lease portfolios. Finance companies are also growing originations faster than banks with 54.2% of all new auto accounts and 51.8% of dollar originations through April 2015 coming through finance companies.

Carlson continued, "The captive auto finance companies are supporting sales for the manufacturers, and dealers continue to work with independent auto finance companies to find the right loans for their customers, particularly in the non-prime space. This combination has led to finance companies growing slightly faster than the commercial bank segment."

Other highlights from the most recent Equifax data include:

  • More than 9 million auto loans, totalling $182.9 billion, have been originated through April 2015. This is a 5.8% increase in accounts and an 8.0% rise in balances compared to the same time as last year. These are the highest levels for this time period since Equifax began tracking this data.
  • 2.12 million auto loans to consumers with an Equifax Risk ScoreSM below 620, generally considered subprime accounts, have been originated through April 2015, a 9.6% increase over last year.
  • In 2015 through April, 23.5% of auto loans were issued to consumers with a subprime credit score, a slight increase over the 22.7% seen over the same time period last year.
  • The average amount of all auto loans issued in April 2015 was $20,800, which is a 3.65% increase over April 2014, while the average amount for a subprime loan increased 3.74% to $18,200.

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