Experian: Gap Between Amount Financed for Used & New Vehicles Continues to Close
SCHAUMBURG, Ill. — With used-vehicle prices continually pushing toward the amount buyers could pay for a new model, Experian Automotive discovered the amount financed is reflecting this trend.
When discussing second-quarter data, Experian pinpointed how much this gap has closed during the past two years.
Melinda Zabritski, Experian's director of automotive credit, showed during a webinar this week that the average amount financed for a used vehicle during the second quarter stood at $17,062, which is 67.6 percent of the average amount financed for a new model. That left the gap at $8,178
During the second quarter of last year, Experian determined average used-vehicle contracts came in at $16,581 or 65.74 percent of a new model. In the same time period of 2009, it was $15,554 or 63.9 percent.
While revealing charts displaying the overall averages, Zabritski told Webinar participants that "when you start running this analysis across vehicle segments, the gap can get considerably smaller.
"We definitely have an impact of the wholesale market being extremely strong, used-vehicle prices increasing, the amount financed increasing and the gap between the two getting smaller," she continued. "Whether this pushes used-vehicle consumers to the new-vehicle market, it very well could be doing that," Zabritski surmised.
"It's definitely something we'll keep an eye on more closely. The gap between those two is definitely getting smaller," she added.
Trends Regarding Term Length
Other data points new to Experian's quarterly analysis were charts that showed distributions of loan terms. For both used- and new-vehicle contracts, the majority of loans last at least 49 months and run up to 84 months.
For used vehicles, the greatest penetration of loan terms resides between 61 and 72 months. Experian said 27.97 percent of used loans fall into this category, 3.7 percent more than the same time last year.
Experian shared the durations of used-vehicle contracts as of the second quarter along with the year-over-year change:
—25 to 36 months: 6.46 percent, which is down 10.8 percent.
—37 to 48 months: 11.70 percent, which is down 3.7 percent.
—49 to 60 months: 26.81 percent, which is down 7.4 percent.
—73 to 84 months: 25.10 percent, which is up 12.5 percent.
On the new-vehicle side, Experian discovered second quarter loan-contract terms settled this way:
—25 to 36 months: 4.35 percent, which is down 4.8 percent.
—37 to 48 months: 3.48 percent, which is down 1.9 percent.
—49 to 60 months: 27.88 percent, which is down 3.8 percent.
—61 to 72 months: 30.65 percent, which is down 6.2 percent.
—73 to 84 months: 32.86 percent, which is up 11.6 percent.
Loan-to-Value Analysis
In yet more analysis Experian is bringing out quarterly, the firm is combining its data with information from NADA Used Car Guide to generate average loan-to-value percentages for both used and new vehicles. Zabritski showed this data broken down both by consumer risk segment as well as lender type.
First, here is the second-quarter loan-to-value analysis across the major consumer credit categories:
—Deep Subprime: Used was 143.25 percent; new was 120.12 percent.
—Subprime: Used was 134.91 percent; new was 123.08 percent.
—Non-Prime: Used was 130.83 percent; new was 124.73 percent.
—Prime: Used was 127.53 percent; new was 123.28 percent.
—Super Prime: Used was 116.28 percent; new was 107.38 percent.
To recap, Experian defines the credit spectrum as:
Super Prime
Scorex Plus: 740 plus
VantageScore: 801-990
Prime
Scorex Plus: 680-739
Vantage Score: 701-800
Non-Prime
Scorex Plus: 620-679
VantageScore: 641-700
Subprime
Scorex Plus: 550-619
VantageScore: 601-640
Deep subprime
Scorex Plus: less than 550
VantageScore: 501-600
Furthermore, here is the second-quarter loan-to-value analysis across major lending categories:
—Commercial Banks: Used was 121.54 percent; new was 108.25 percent.
—Captive Finance Companies: Used was 127.92 percent; new was 110.24 percent.
—Credit Unions: Used was 113.33 percent; new was 117.79 percent.
—Other Finance Companies: Used was 151.06 percent; new was 123.97 percent.
To reiterate, Experian defines other finance companies as organizations such as Santander, Consumer Portfolio Services and others not holding bank deposits.
Top Lenders by Market Share
Before going into details on which specific lenders held the greatest market share as of the second quarter, Experian took a broader look.
Zabritski explained why commercial bank penetration jumped 28 percent year-over-year to 40.95 percent, while the captive finance company level sunk 29.3 percent to 19.69 percent. The reason: what previously fell into the jurisdiction of GMAC — the former financial arm of General Motors — now resides on the books of Ally, which is classified as a commercial bank because it holds deposits.
"So we're starting to see some inflation of the bank share," Zabritski indicated. "That should start to level off in the coming quarters when we do these year-over-year comparisons."
The market penetration for credit unions was 7.0 percent year-over-year during the second quarter, according to Experian, settling at 16.91 percent of the auto loan market.
Holdings by other finance companies as well as penetration within the buy-here, pay-here market each ticked higher in the second quarter. Experian said other finance companies' penetration moved 2.7 percent higher to 13.50 percent while BHPH's share edged 1.6 percent higher to 8.95 percent.
Experian also revealed the top 20 lenders by market share as of the second quarter:
Ally: 6.93 percent
Wells Fargo: 5.79 percent
Toyota: 4.84 percent
Chase: 4.75 percent
Honda: 3.92 percent
Ford: 3.69 percent
Capital One: 3.03 percent
Bank of America: 2.61 percent
Nissan/Infiniti: 1.86 percent
Fifth Third: 1.56 percent
Santander: 1.46 percent
AmeriCredit: 1.41 percent
Hyundai: 1.29 percent
US Bank: 1.16 percent
Huntington: 1.09 percent
BMW Bank: 1.08 percent
SunTrust: 0.99 percent
Credit Acceptance: 0.98 percent
Citizens: 0.92 percent
USAA: 0.91 percent
Moving on, top used-vehicle lenders include:
Wells Fargo: 7.17 percent
Ally: 3.90 percent
Chase: 3.71 percent
Capital One: 3.31 percent
Toyota: 2.89 percent
Santander: 1.88 percent
Bank of America: 1.80 percent
Credit Acceptance: 1.56 percent
AmeriCredit: 1.37 percent
Fifth Third: 1.37 percent
CarMax: 1.27 percent
Honda: 1.08 percent
Huntington: 1.02 percent
USAA: 1.02 percent
Ford: 0.93 percent
Westlake: 0.89 percent
BMW Bank: 0.88 percent
US Bank: 0.82 percent
BB&T Bank: 0.74 percent
SunTrust: 0.71 percent
Finally, top new-vehicle lenders include:
Ally: 12.05 percent
Honda: 8.7 percent
Ford: 8.35 percent
Toyota: 8.13 percent
Chase: 6.50 percent
Nissan/Infiniti: 4.26 percent
Bank of America: 3.96 percent
Wells Fargo: 3.46 percent
Hyundai: 3.35 percent
Capital One: 2.57 percent
Fifth Third: 1.88 percent
US Bank: 1.74 percent
AmeriCredit: 1.48 percent
Citizens: 1.47 percent
World Omni: 1.46 percent
SunTrust: 1.46 percent
BMW Bank: 1.42 percent
Kia: 1.41 percent
Volkswagen: 1.37 percent
PNC Bank: 1.23 percent