Total open loan balances are on the rise, according to Experian’s Q1 2021 State of the Automotive Finance Market Report. So what does this mean for car dealers? Joining us today, is Melinda Zabritski, Senior Director of Automotive Financial Solutions for Experian. She discusses key findings from the Q1 2021 State of the Automotive Finance Market Report, and the outlook for Q2.
Zabritski starts off the conversation by telling us what the State of the Automotive Finance Market report covers. The report is an industry review that provides insights into the automotive finance space, says Zabritski. They primarily review how and what consumers are purchasing, who’s doing the financing, and some of the other trends around automotive financing.
Zabritski says, the overwhelming trend they have seen so far this year, is the consistency and perseverance of the auto industry. She adds that consumers are still out shopping and financing but leasing does remain low, with 1 out of 4 new vehicles being leased. Prime consumers are also shifting into newer vehicles.
One of Zabritski’s main concerns is affordability. The loan amounts and payments continue to grow. Consumers are opting for SUVs, which result in higher payments. She says they have been having loan amounts equaling to $35,000 to $36,000 dollars. Those monthly payments are up to $577 dollars a month. Despite higher payments and longer loan terms, Zabritski says, it doesn’t keep the consumers in the vehicle longer.
Zabritski says the amount of cars on the road hasn’t changed just yet, either. She believes that will take some time to trickle down, before consumers start disposing of their vehicles, or reducing the number of vehicles for their households.
Zabritski wraps up the conversation by discussing the outlook for Q2 and the remainder of 2021. Zabritski says the market is very resilient and she expects volume to pick back up.
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