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

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

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.

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