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 In the second quarter, 85 percent of new car purchases and 53.8
percent of used car purchases were financed, according to data from
Experian Plc, an information provider.
That was up 0.5 percentage points and 0.9 percentage points,
respectively from the same period in 2013.
Additionally, the size of auto loan amounts and monthly payments
continued to rise, especially for used cars. Since the second
quarter of 2013, the average used vehicle loan rose 1.9 percent to
$18,258 and the average monthly payment on such vehicles rose 1.1
percent to $355, both all-time highs.
"More and more consumers, especially those that are credit
challenged, are turning to the used vehicle market as a viable
option to purchase their next car," said Melinda Zabritski, senior
director of automotive finance for Experian, in a statement.
Banks were the largest lenders to consumers buying used cars,
financing 35.6 percent of all such purchases, or 0.8 percentage
points less than the second quarter of last year.
In recent years banks have begun to focus more on the used car
market as automakers' in-house financing arms came to dominate the
new car market. Such "captive" finance companies made more than one
out of every two new car loans in the second quarter, according to
Experian.
Regulators have become more concerned with banks' willingness to
lengthen terms on car loans, lend to borrowers with lower credit
scores and give out loans that are larger than vehicles are worth.
In addition, the U.S. Department of Justice has started
investigating subprime auto loans that companies such as General
Motors Co's auto financing arm and Santander Consumer Holdings USA
Inc have made and securitized since 2007.
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But at least in the second quarter, the share of both new car and
used car loans that went to borrowers with subprime credit scores
declined, according to Experian.
"Lenders are still showing cautionary signs when lending to the
subprime market and keeping their risk at manageable levels,"
Zabritski said.
Wells Fargo & Co remained the largest U.S. auto lender in the second
quarter with a market share of 5.75 percent, down from 5.89 percent
a year prior.
Capital One Financial Corp surged past JPMorgan Chase & Co to become
the third largest U.S. auto lender after Ally Financial Inc. The
McLean, Virginia-based bank's share of the used car market rose from
3.77 percent to 4.20 percent.
(Reporting by Peter Rudegeair; editing by Andrew Hay)
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