Credit Unions Amass Largest Share of the Automotive Finance Market in Five Years

Rhea-AI Summary

Experian's Q1 2022 Automotive Finance Report highlights rising vehicle loan amounts and payments amid ongoing inventory shortages. Credit unions increased market share to 22.06% from 18.55% year-over-year, while captive financing dropped to 25.38%. Average new vehicle loans surged 12% to $39,540 and used vehicle loans rose 25% to $27,945. Monthly payments also increased, with new vehicles averaging $648 and used $503. Despite these trends, average interest rates saw slight declines, indicating a complex market influenced by supply shortages.

Positive

• Credit unions gained market share, increasing from 18.55% to 22.06%.
• Outstanding automotive loan balances rose to $1.37 trillion, up from $1.28 trillion.
• Average new vehicle loan amounts increased by 12% to $39,540.
• Average used vehicle loan amounts rose 25% to $27,945.

Negative

• Captive financing market share declined from 29.75% to 25.38%.
• Leasing of new vehicles decreased to 21.31% from 28.31%.

New Experian report shows ongoing impact of inventory shortage on automotive finance market, as average vehicle loan amounts and monthly payments continue to rise

SCHAUMBURG, Ill.--(BUSINESS WIRE)-- Through the first three months of 2022, there were some shifts in the automotive finance market, most notably, significant growth for credit unions. According to Experian’s State of the Automotive Finance Market: Q1 2022 report, credit unions amassed 22.06% of the total automotive finance market, up from 18.55% a year prior.

The credit union growth is concurrent with a drop in market share for captives, which declined from 29.75% to 25.38% year-over-year. The data also showed more modest year-over-year growth for banks (up 2%) and finance companies (up 4%).

“With low inventory and high consumer demand, we’re not seeing nearly as many incentives on the market. This has resulted in an opportunity for credit unions to step in and gain market share, as they often offer the lowest interest rates,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions. “Credit unions tend to focus on the used vehicle market and given the ongoing inventory shortages reducing availability of new vehicles and increasing demand for used, it makes sense to see this kind of increase in market share.”

Used vehicle financing comprised 58.98% of all vehicle financing in Q1 2022, with new vehicle financing making up the other 41.02%, compared to 57.37% and 42.63%, respectively, in Q1 2021. Breaking down new vehicle financing further, leasing continued to decrease year-over-year, making up 21.31% of new vehicle financing in Q1 2022, compared to 28.31% this time last year.

Average vehicle loan amounts and payments continue to rise

Additional impacts of the ongoing inventory shortage include increases in average vehicle loan amounts and monthly payments, for both new and used vehicles. The average new vehicle loan amount went up nearly 12% year-over-year, increasing from $35,385 in Q1 2021 to $39,540 in Q1 2022, while the average used vehicle loan amount rose nearly 25% year-over-year, to reach $27,945, up from $22,378 in Q1 2021. Meanwhile, the average new vehicle monthly payment increased $71 year-over-year, reaching $648 in Q1 2022, while the average monthly payment for used vehicles reached $503, up $89 year-over-year.

Despite the average loan amounts and monthly payments rising, average interest rates and loan terms remained more level year-over-year, and even seeing some slight decreases. The average interest rate for a new vehicle decreased from 4.15% in Q1 2021 to 4.07% in Q1 2022, while the average interest rate for a used vehicle dipped from 8.82% to 8.62% during the same time frame. The average loan term for new vehicle saw a slight decrease, from 69.50 months in Q1 2021 to 69.48 months in Q1 2022. Used vehicles saw an uptick in average term, as it reached 67.65 months in Q1 2022, up from 65.73 month in Q1 2021.

“We’re continuing to see the inventory shortage reflected in financing attributes, especially with used vehicle values continuing to rise so significantly due to demand,” Zabritski continued. “Staying close to the data will be key for lenders and dealers to make informed decisions, and help consumers find the right vehicle for their needs and budget in the quarters to come.”

Additional findings for Q1 2022:

• Outstanding automotive loan balances grew to $1.37 trillion in Q1 2022, up from $1.28 trillion in Q1 2021.
• Prime financing saw the most growth in Q1 2022, increasing from 42.92% of total financing in Q1 2021 to 45.45% in Q1 2022.
• The average credit score for a new vehicle increased two points from Q1 2021 to Q1 2022, reaching 736, while the average used vehicle credit score increased six points in the same time frame to 669.
• SUVs and CUVs surpassed 60% of financing in Q1 2022, up from 58.95% in Q1 2021.
• The average payment difference between a new vehicle loan and lease was $126.

About Experian

Experian is the world’s leading global information services company. During life’s big moments – from buying a home or a car, to sending a child to college, to growing a business by connecting with new customers – we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organizations to prevent identity fraud and crime.

We have 20,600 people operating across 43 countries and every day we’re investing in new technologies, talented people, and innovation to help all our clients maximize every opportunity. We are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index.

Learn more at www.experianplc.com or visit our global content hub at our global news blog for the latest news and insights from the Group.

Experian and the Experian marks used herein are trademarks or registered trademarks of Experian and its affiliates. Other product and company names mentioned herein are the property of their respective owners.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220602005288/en/

Jordan Takeyama

Experian Public Relations

1 714 830 7561

jordan.takeyama@experian.com

Source: Experian

FAQ

What is the average vehicle loan amount reported by Experian for Q1 2022?

The average new vehicle loan amount in Q1 2022 is $39,540, while the average used vehicle loan amount is $27,945.

How has the market share of credit unions changed in Q1 2022?

Credit unions increased their market share from 18.55% to 22.06% year-over-year.

What were the average monthly payments for new and used vehicles in Q1 2022?

The average monthly payment for new vehicles reached $648, while used vehicles averaged $503.

How did captive financing perform in Q1 2022 according to Experian?

Captive financing market share dropped from 29.75% to 25.38% year-over-year.

What does the Experian report say about outstanding automotive loan balances?

Outstanding automotive loan balances grew to $1.37 trillion in Q1 2022, up from $1.28 trillion.