A record number of U.S. consumers are taking out loans to purchase cars, especially used ones, according to a new study released by Experian Plc.
During the second quarter, 85 percent of all new car purchases and 53.8 percent of used car purchases were financed, according to the information provider. This is an increase of 0.5 percentage points and 0.9 percentage points, respectively, compared to the same time in 2013.
The size of auto loan amounts and monthly payments continued to rise, especially for used vehicles. 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 of which are new 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.
The largest lenders to consumers purchasing cars were banks, which financed 35.6 percent of all such purchases, or 0.8 percentage points less than the second quarter.
Regulators have started to become more concerned with banks' willingness to lend to borrowers with lower credit scores, give out loans that are larger than vehicles are worth, and lengthen terms on car loans, according to Reuters.
The U.S. Department of Justice has started investigating subprime auto loans that companies have made and securitized since 2007.
The share of both new car and used car loans that went to borrowers with subprime credit scores dropped during the second quarter, Experian said.
"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 top U.S. auto lender during the second quarter with a market share of 5.75 percent, down from 5.89 in 2013.
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