A record number of U.S. consumers are taking out loans to
buy cars, especially those purchasing used vehicles, according to data released
on Wednesday. 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.
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.
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. 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.
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.
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