Published in May 2024, our U.S. National Consumer Credit Trends Report on Originations¹ provides trends in auto loans, leases, and deeper insights into the current trends so you can better understand those who are seeking loans. 

Meet Jane, someone with an average credit score who is in the market for a car. She is looking for something used - this is a need, not a want, after all, average payments for a new vehicle are still above $700 on average and she needs something more affordable. As a lender or dealer, it's essential you understand the latest insights in auto loans and leases so that you can understand the competitive market and more about consumers so you can offer the best deal for Jane but also be profitable for you. Here's a breakdown of what's been happening in the market beyond just the facts and figures. 

1. Overall Market Trends 

In the past year, there has been a slight increase in the number of auto loans and leases issued, meaning more people are taking out loans to buy cars. Additionally, the total amount of money borrowed for these loans has gone down by 2.9% since this time last year.¹ For Jane, this means she may have to settle for an older model or one with less features than she originally planned on.  

2. Subprime Accounts 

Auto loans issued to subprime accounts have also decreased. In fact, this is the lowest February YTD subprime share since 2010. However, these loans still make up around 16.3% of all auto loans¹, suggesting that lenders are tightening loan requirements. This may have a negative impact on Jane since she falls within this lending category. 

3. Loan Amounts 

On average, the amount of money borrowed for auto loans has gone down slightly; however, for subprime borrowers, the average loan amount has actually increased. While the overall market is seeing a decrease in loan amounts, people with lower credit scores are borrowing slightly more money for their cars. This means Jane will need to shop around for the best interest rate to keep her monthly payments within her budget. 

4. Historical Comparison 

Compared to previous years, the share of subprime accounts issued in February 2024¹ have decreased 4.2% year-over-year.¹ This data point indicates consumers like Jane might not be in the target audience for auto loans. Lending standards could be tightening, making it more challenging for some individuals to finance a car purchase. 

For our prospective car buyer, Jane, this information suggests that while there are still opportunities to secure auto financing, particularly for a consumer with a good credit score, there might be slightly fewer options available compared to previous years. If Jane’s credit score is below 620, she could still get a loan, but she may face stricter lending criteria or higher interest rates. 

It's essential for buyers like Jane to shop around, compare offers, and consider ways to improve their credit score to increase their chances of securing favorable financing terms. 

Here is some good news: lenders are tapping into alternative data to approve more people for loans without increasing their risk. Alternative data or information not found in traditional credit reports² like telco, utilities and rent payments can be helpful to folks like Jane. By layering in alternative data, lenders can move people from unscorable to scorable or subprime to prime. Alternative data may help get Jane a better rate, allowing her to purchase the car she wants. This is a win-win for both Jane and her lender. She does not have to settle for a car simply because it’s within her budget - making Jane a happy customer.

1. U.S. National Consumer Credit Trends May 2024, Equifax

2. Expanding Access to Credit with Alternative Data, Equifax