With interest rates for new-vehicle loans at a pre-recession low, car buyers took out larger loans in the third quarter, according to a new report from Experian Automotive. Specifically, new-car interest rates fell to 4.27%, while the average amount financed reached its highest level since pre-recession 2008 ― $26,719, up from $25,963 in 3Q12.
Quarter to quarter, average loan terms ticked up one month to 65 months, which translated to a $458 average monthly car payment, relatively unchanged from the prior quarter.
Meanwhile, the nonprime, subprime, and deep subprime sectors snared an increasing amount of business, garnering 26.04% marketshare last quarter, from 24.84% in 3Q12.
Lease penetration ticked up to 27.22% of all new-vehicle financing, from 24.40% in 3Q12. Compared with the second quarter, though, lease marketing declined 42 basis points. Average lease payments last quarter were $404 per month.
“Subprime lending is still growing slightly, but is still well below pre-recession levels in the highest risk segments, and its growth rate has slowed considerably,” said Melinda Zabritski, senior director of automotive credit for Experian Automotive, in a release. “It seems as though lenders are approaching their ceiling for how much risk they are willing to take.”
