SCHAUMBURG, Ill. -

The significant rise in wholesale prices experts have been discussing for much of the year spilled into auto financing.

According to Experian’s latest State of the Automotive Finance Market report released on Thursday, analysts spotted notable increases in several categories with used-vehicle financing.

For example, Experian said the average amount financed for a used vehicle was $23,365 during the second quarter of this year, up from $21,357 in Q2 of last year.

Likewise, analysts said the average monthly payment reached $430 in Q2, up from $397 in Q2 2020.

Furthermore, Experian determined the average term for a used-vehicle installment contract also saw a slight uptick, from 65.52 months in Q2 2020 to 65.88 in Q2 2021. Meanwhile, the average interest rate for used vehicles saw a slight decrease in the same time frame, ticking down from 8.84% to 8.66%.

“We can attribute much of the continued increase in used-vehicle prices to inventory shortages; however, it’s important to remember this has also increased trade-in values, a positive trend for consumers entering the market,” Experian senior director of automotive financial solutions Melinda Zabritski said in a news release.

“Understanding the trends in both new and used financing is critical to ensuring that lenders and dealers are able to work with consumers and ensure the right options are available for them,” Zabritski continued.

And speaking of new models, Experian discovered that new vehicles represented a larger portion of financing in Q2 at 44.81% compared to 38.05% in Q2 of last year. Analysts explained that the trend is proving that while the automotive finance market remained resilient amid the pandemic, now more than a year later, the industry is returning to more normal levels, particularly in regards to new-vehicle financing.

Experian found that the average amount financed for a new vehicle decreased to $35,163 in Q2, down from the record high of $36,121 set a year earlier.

Analysts reason that last year’s spike was driven by an increase in financing of full-size pickup trucks, which was likely sparked by the availability of incentives.

While the average amount financed for a new model decreased in Q2, Experian pointed out that the average monthly payment did see a minor increase from $570 to $575 year-over-year. Analysts cited a slight decrease in average term as the trigger since its softened to 69.36 months in Q2 of this year from 71.31 months during the second quarter of last year.

Average APR for those new-car contracts also ticked up year-over-year in the second quarter, moving from 3.95% to 4.09%.

“As we look at this quarter’s data, it’s important to remember that Q2 2020 is when we started to see the impact of the pandemic on the automotive finance market, so we’re comparing to an anomalous quarter,” Zabritski said. “Incentives played a large role in keeping the market moving in 2020, and those haven’t been as prevalent in 2021, which explains shifting consumer preferences and interest rate changes.

“Understanding the full context of the data will help the industry make informed decisions as we continue to navigate challenges like the microchip shortage,” she continued.

Experian also mentioned what consumers choose to finance has steadily changed over the years, with larger, more expensive vehicles like SUVs and crossover vehicles (CUVs) comprising a larger share of new-vehicle financing.

In Q2 2016, analysts said, SUV/CUVs made up 40.83% of new vehicles financed, while cars were at 41.44%. Five years later, the SUV/CUV segment jumped up to 57.54% of new-vehicle financing, while cars made up just 24.44%.

Experian added that full-size pickup trucks have also grown in new-vehicle financing, though not as quickly, growing from 14.13% in Q2 2016 to 15.62% in Q2 2021.

As the percentage of new cars financed decreased, Experian also noted that the growing average amount finance for new SUV/CUVs and trucks gives additional context to steadily rising average loan amounts for new vehicles over the last five years.

In Q2 2016, Experian said the average amount financed for a new car was $21,178, compared to $25,771 for a new SUV/CUV, and $33,190 for a new truck. In the second quarter of 2021, the average amount financed for a new car was $24,731, compared to $29,039 for a new SUV/CUV, and $39,955 for a new truck.

“The trend will also continue to impact the used vehicle market, as these larger vehicles enter the used market in coming years,” Experian said.

Experian highlighted five additional findings from its Q2 data, including:

— The automotive-finance market continues to be more prime, with super prime and prime consumers comprising 61.93% of the market in Q2 2021, compared to 59.22% in Q2 2020.

— Banks and captive finance companies saw increases in overall market share of auto financing: Banks took the top spot at 30.93% in Q2 2021, compared to 28.77% in Q2 2020, while captives reached 29.67%, up from 29.33% in the same time frame.

— The No. 1 financed vehicle in Q2 2021 was the Honda CR-V, making up 2.9% of financing, followed by the Chevrolet Silverado 1500 (2.6%) and Honda Civic (2.51%).

— Average credit scores for new and used vehicles continued to climb. The average score for a new-vehicle financing was 732 in Q2 2021, up from 729 in Q2 2020, while the average score for used-vehicle finance was 665 in Q2 2021, compared to 655 in Q2 2020.

— The average difference between an installment contract and lease payment was $109 in Q2 2021.

To learn more, watch the entire State of the Automotive Finance Market: Q2 2021 webinar, which can be found via this website.