Experian: Leases, Portfolios Up; Credit Scores, Rates Down in 1Q13

If there were any doubts about a leasing comeback, the proof is in the latest data from Experian Automotive: Leasing accounted for 27.5% of all new vehicles financed in 1Q13. “This is a historical high,” Experian Senior Director of Automotive Credit Melinda Zabritski said during the company’s State of the Automotive Finance Market webinar today.

Leasing had a 3.1% year-over-year increase to reach the highest level Experian has reported since it began tracking the auto finance market in 2006. Toyota Financial Services led the first-quarter charge, with American Honda Finance Corp., Ford Motor Credit, Ally Financial, and Nissan Infiniti Financial Services rounding out the Top 5.

Total portfolio growth also increased year-over-year, by $63.5 billion, with an uptick in each area of auto finance. Banks rose to $257 billion from $238 billion, captives increased $12 billion to $212 billion, and credit unions grew to $159 billion from $144 billion, while other financiers rose to $99 billion from $81 billion.

Average credit scores continued their slight decline, dropping to 755 from 760 on new cars, and to 657 from 659 on used. “We’ll probably see that trend line continue the next couple quarters,” Zabritski said.

Average loan terms were again on the rise with both new- and used-car terms increasing by one month to 65 months and 60 months, respectively. Going hand-in-hand with that, rates are at “pretty historical lows” for both new and used financing, Zabritski said. The new-car loan rate dropped to 4.47%, a 12-basis-point drop from 1Q12, while used was down 30 bps at 8.75%.