You've gotten the chance to hear from Melinda Zabritski, who's the head of Automotive Financial Insights for Experian. If you have been here, you're better for it. Melinda does a terrific job giving us a landscape of the consumer, of the auto industry, and really kind of encapsulating, I think, what we all feel sometimes when we're thinking about whether buyers are buying, what types of cars they're buying. I'm going to give Melinda the floor and let her go through her slides, but it's always an education. Thank you very much for being here, and thank you for making number 50.
Awesome. Thank you. No one went out last night, right? Everyone was in their room by 9:00 last night. I don't think I saw any of you at the roulette wheel last night. I certainly was there. Okay. Maybe a little bit too late. Okay, so I am going to inundate you with data. If I see anyone starting to slip under their seats, don't worry, I won't call you out.
You're teleported.
Exactly. I have been with Experian for, let's see, I think I'm wrapping up my 23rd year. So it's been a while. I do a quarterly presentation on the State of the Automotive Finance Market, every single quarter since 2007. If you do the math, that's a lot of quarters of playing with this data. So, I call this preliminary Q3 because the last month of the quarter is still a little partial in our data, but it's essentially what we're going to see from a Q3 standpoint. I'm going to cover, like I said, a lot of information here. So I'm going to hit what we're seeing from origination highlights and availability, being inventory vehicle availability. I am going to hit a little bit on EV, just because you can't not talk about EV.
Then, of course, affordability and what we are seeing in the auto finance space. How are consumers financing? What does it look like for loan amounts, payments, et cetera? It is a very different marketplace than it was even five years ago. I mean, the average consumer who is coming into market right now, their last car purchase was pre-COVID. So very, very different between 2019, 2020, and what we are seeing today. I mean, we are talking new car payments were $500 then, and they are set in the upper $700s now. So very, very different. Then I am going to wrap up with what we are seeing from automotive portfolio, how much is out there. Of course, I like to end on delinquency. I should start with delinquency because it is always the negative point, but I am going to end on delinquency. I talk about credit scores.
You can see what the score ranges are there. Not going to belabor that. Just as an FYI, this is all Experian data. We get DMV registration and title data from all the states. We are one of two compilers of all this information. Of course, most people know us as a credit bureau, so we match our title reg data with what we see on our consumer credit file and are able to compile all of that and get a lot of great statistical data. So this is not sampled. When I talk about the industry, I am looking at pure retail. This will not involve anything fleet, so this is purely consumer retail. The slides will be available, so I am not sure how you guys distribute the slides, but yeah. So they are all available. So I like to start with what I call my automotive snapshot.
What and how are consumers transacting? I will warn you, my slides always have a lot going on on them, but I will explain what we are seeing here. Again, this is Q3. It is a three year time period, so I am looking at 2024, 2025, 2026. On the top, the two top segments there are how consumers are transacting for new and used vehicles. So let us start there. On the upper left-hand side, we are looking at new car sales.
Essentially, in Q3 of this year, as you can see, that light blue line is leasing. Leasing has been really flat. We have been leasing around 23%, 24%, and that has been pretty consistent for the past several years. I do not think we are ever going to get back to those 33%, 34%, 36% leasing figures that we saw 10 years ago. One, we do not need to. The manufacturers do not need to.
Leasing is not an inexpensive product. You get those residuals wrong, it is not a happy picture. So leasing around 23%. What has been interesting this year is we are starting to see more loans come into play. When the rates went up a handful of years ago, we started to see a lot more cash. That is that dark purple at the bottom of that upper left hand. So we started to see up to about 20% cash, which is unusual. Normally, cash is around 15%, 16% of the market. So right now, we are around 17% for new car sales. So more loans coming into play. On the used car side, it is kind of the exact opposite. We are really seeing record highs of cash for used cars. So part of that is because of what we see on the bottom of these charts.
Bottom left is, I grouped the vehicles by what I call my vehicle age groups. About 25% of everything consumers purchased in Q3 were new cars, 25%. Most of the market is always used. When you think about on the retail side, we tend to retail about 12.5 million new cars. I mean, you always look at SAAR. SAAR is around 16.5, I think, right now. You take fleet, government, commercial out of that, retail is around 12.5 million. Most of it is used cars, what consumers transact. That light blue line that says 14.4%, it is increasing, but those are our late model used cars. So current plus three. It is a very high demand segment. Dealers are struggling for this segment. These are typically your off-lease vehicles, so they tend to be CPO. It is your off-lease.
High, high, high demand, and it is a very small part of the market. I have talked to dealers who say they are buying inventory on Amazon Autos. That is just so bizarre. The segment that is growing is that little lavender line at the bottom. It is almost 44%. Those are nine plus year-old model vehicles. Nine plus year-old model vehicles. It used to always be a lot of lenders would finance current plus eight. Now they are starting to do 10. Now they are starting to explore 12, because that is what consumers are buying, and these are a lot of prime consumers. Half of the consumers that buy these older vehicles are prime. So, good credit quality. On the lower right-hand side, you can see when you get to that light lavender bar at the bottom, there is not a lot of financing on them.
You see a lot of cash here, so it is only financed about 15% of the time. Again, this is an opportunity area that a lot of lenders are starting to expand into, because again, it is highly competitive for the banks out there. Part of that light lavender or that light blue area, that high demand is off-lease. This year, we are doing better. We are picking up an extra about half a million off-lease vehicles this year. You can see we are going to hit a peak in the second quarter of 2027, but a lot of EVs are going to be in that. Next year, we are going to do a little bit better. So 2027, we are going to pick up about 3.3 million off-lease vehicles.
If you think back to when leasing was 30% of the market, we were getting 4.5- 5 million zero to three year-old vehicles coming in off-lease. Again, we are not going to return to that, but the off-lease inventory is going to pick up a little bit better. Again, this is just anticipated off-lease for retail. The 2028 figures, I only did a couple quarters there. We are going to pick up a little bit more due to the 24 month leases this year, and of course, 24 month leases, a lot of those are EV. EV tends to lease around 24 months instead of that typical 36 month. The other thing, of course, we look at is the age of the vehicles. The car park is aging. That also means that the average age of the vehicles being retailed is also aging.
This is 2021 compared to 2026, so a little bit of a five year view. I broke it out by franchise stores, independent, and grand total. That grand total will also include private party, things like that. Essentially, right now, the average age on the franchise side of cash is decreasing, because again, inventory's kind of stabilized. We're getting a bit more availability. When you look at financing, the average age on franchise as well as independent stores, that average age of the vehicle being financed continues to increase. Again, that's as we're getting more and more of those nine, 10, 11+ year-old vehicles being purchased. On the far right-hand side, again, 2021 compared to 2025, the average age of a used car being sold right now, it's 11.6 years old. Obviously, it's younger at franchise, but it's also aging.
Our dealers are dealing with more and more older cars. Oh, in case you're not aware, SEMA AAPEX is going on right now at the convention hall. If you've not ever seen a SEMA conference, head over there. It's pretty remarkable what people will do to their cars. Anyone been to SEMA? Anyone going to head over there? Yeah, it's a very interesting conference. We have a whole bunch of people over there right now. Average age of vehicles growing, which also, of course, means consumers are keeping their vehicles in better shape. Again, all the aftermarket products and all of that, doing very well. As far as where consumers are purchasing, the left-hand side, I'm looking at the split between franchise and independent stores. The independents have actually picked up a little bit of market share.
Part of that is really driven by, of course, things like CarMax, Carvana, those retailers picking up a lot of steam, and a lot of that is due to the EV space. Carvana is actually the number one retailer of used EVs, in case you were not aware of that. They're also the number one financer of used EVs. When I look at who's doing the lending by the dealer types, one of the biggest shifts I've seen on the independent side is that dark blue stack at the top, and that's banks. We're seeing fewer and fewer banks financing in the independent space. The biggest growth area, which we'll see coming up, is really in that FinCo space. Part of it's due to dealer captive, but it's not all dealer captive. We see a lot of growth in our FinCo space.
That leads me to this slide, looking at market share. I had somebody ask me recently, "What do I have to do to become an indirect lender?" I'm like, "You need to buy somebody." This is a very difficult space for lenders to get into if they're not already in indirect lending. As we know, the majority of auto finance is indirect lending. Your dealer books the loan for you. Even if you're direct, they'll flip it to indirect as soon as they can. I took a look at the top 25 lenders. Left-hand side, top 25 lenders for total financing. As you can see, the top 25 dominate the market. Top 25 lenders are over 60% of all of auto financing, and the biggest growth is occurring in used lending. New vehicle financing, very difficult to crack into. It's very captive-dominated.
But the top 25 have actually lost a little bit of market share. Again, part of that is due to growth with the FinCos. Several FinCos are full spectrum, and they are increasingly picking up share. It is the used space that is consolidating a little bit more. So used lending, we have a whole bigger slew of lenders who work in this space. You get a lot of credit unions, again, FinCo, et cetera.
There are thousands and thousands of lenders in the market. People tend to think, "Hey, there is only a handful." Nope, there are thousands of lenders. Used car space, we are consolidating even more. It is about 52%. So that is where we are getting more and more of that shift into the biggest lenders. Again, part of that is dealer captive. So when I look at the market share, this is total financing, new, used, loan, lease.
You might be surprised. You might be thinking, "Oh, it is the captives." No, right now it is the banks. So banks have kind of returned as the largest lender. You can kind of see on the far left-hand side, way back in 2021 and even earlier, the banks were the largest lenders. The chip shortage hit, inventory shortages hit, and the captives kind of returned to dominant position, mostly because running incentives to get people into the stores and to start moving metal again. But right now, it is the banks. Now, obviously, there are bank captive relationships. Chase has a lot of captive relationships. Wells picked up Audi VW, but the banks have gotten very aggressive. There is one bank that has kind of pulled back. You have probably seen them in the news. They are still out there, but they have certainly pulled back.
But most of the banks that I talk with, and I speak with most of the top 25 from the previous slide, they are all in growth mode. They are all looking to get more aggressive. But the one to watch here is that lavender line. It is kind of that only one that is really just sloping upward, and that is finance company. So these are your non-depository, big FinCos. Again, part of that is dealer captive, like your AutoNation, your Driveway with Lithia. Some of the other big dealer groups are starting to explore creating dealer captives. I would not be surprised in the next 12 months if we see another big one come out. They are pretty much looking to build, although they should buy. But again, FinCo, huge growth area. Buy here, pay here, kind of flat.
Now, when you look at new car lending, so new cars, again, we retail about 12.5 million, but we only finance around 7 or 8 million of them. So, so much focus is put on new cars, but again, that is not most of the market. Most of the market is used cars. When we look at new, it is the captives. This is where you see the captives kind of owning the market. But if you notice, their share is dropping. They are not running incentives. They are not getting the deals. Bank share, it is a little bit down year-over-year, but again, that growth is occurring in the FinCos, and the credit unions are starting to put on more business again. You notice the credit unions kind of hit that peak in 2022.
When the rates went up, credit unions were slow to raise their rates, so they aggressively put on market share. Then you notice that steep decline that the credit unions happened. A lot of that was very strategic. When they put on so much automotive business in 2022, just like all of us with investment portfolios, you want to be balanced. They got extremely overweighted in auto. I mean, we're talking like 70% of their book was auto. So a little overweighted. They started to kind of balance that back out again. Mortgages starting to originate more now, so now they're starting to grow again. But it's also very regional. You get very heavy credit union business in the Northeast, not a whole lot in the South. Very, very state by state, very, very regional. On the used car side, it is getting so competitive.
I've never seen the top three lines consolidate like they are on this chart before. So again, finance company, look at that growth. FinCo, credit union, banks are all just duking it out for market share. We're starting to see a lot of the lenders get a little bit more creative with their dealer programs, offering up a few more incentives for their dealers. "Book it with me, and you're going to Aruba." We're starting to see more and more very creative dealer programs as these lenders are looking to gain more share. But again, finance companies, huge amount of growth. A little bit about what we're seeing on the EV side. Is everybody from New York? Does anyone have a car?
It is a loaded question. Does anyone have an EV? All right, quite a few. I bought one last November. I missed the federal tax credits. I was at a leasing conference in New Orleans the last two days of September, which was when I decided I wanted an EV. I don't plan very well when it comes to car purchases. It's kind of like, "Oh, let me go buy a pair of shoes," and next thing I know, I come home with a car. I live in Colorado, Northern Colorado. I called my local Hyundai store. "Yes, we have the IONIQ 5. I want to buy it because we also had a state credit." "No, we can't sell it to you over the phone. You got to be here to sign the forms." I'm like, "You got five days to submit these forms.
I know you do. No, you got to be here. Nobody would sell me a car over the phone. I called VW stores. They would sell me a car over the phone, but they had no inventory in the 10 states surrounding Colorado. I did not get mine until November. Anyway, I digress. EV, it is definitely falling. On the right-hand side, you can see what is growing, hybrid. Hybrid growth is spectacular right now. Hybrids, almost 17% of all new car purchases were hybrids in Q3. It was a little bit lower in Q2, but this is what consumers are purchasing, and I believe it is purely a reaction of fuel prices. I swear to God, as I was driving to the airport yesterday, I am at a red light, and there is a gas station right next to me.
In the 60 seconds it took the light to change, the gas prices went up $0.10. Do not even bring me about diesel. Diesel went up even more. I mean, $6 and something for diesel, that is just crazy. EV, we are a little bit less than 8% of total sales. When you look at the EV side, what we have essentially done, and the figure on the upper right is different from what you saw previously because it includes cash. Essentially, EV, we are back to the mid-7% of new car sales, which is essentially what it was pre-tax credits. Those consumers who are going to buy EVs are still going to go buy EVs. The credits are not going to really make any difference. These are consumers who are purposely out there purchasing EV. Now, it is leased at a much higher rate than other car sales.
If you remember, the other leasing is around 23%. EV gets leased almost 32%. Last year, when you had the little loophole, leasing was huge. Most of the EVs were leased. It was 62%. What we are seeing right now is EVs are about 10% of the lease market. Last year, they were nearly 25%. Think about that. One in four vehicles that were leased were EVs. What does that mean? Off-lease. Off-lease EVs are coming, they are hitting, they are going to hit really hard in Q3 of 2027. This year, about 12% of all the off-lease vehicles are EV. Next year, it is 18%. Again, the figures for 2028 will shift as more of the 24 month leases are generated this year. 2028 is always a little loose.
Again, when you think about when the tax credit expired Q3, September, that is when we are going to get a whole lot of them. I think it is a good opportunity for consumers, especially kind of that near-prime consumer who might not be able to afford kind of a late model typical ICE vehicle. The residual so far from everything I am seeing on the EV front, they are not holding up as well as the other fuel types. These are going to be vehicles that are going to be coming into market at pretty affordable price points. I think it does open up a good opportunity for consumers to move into this space. Of course, when we look at used EVs, it is really dominated by Tesla, 51%. They have been in the market the longest.
It's the number one, number two selling vehicle is the Y and the three. Usually the IONIQ 5 is usually number three. Sometimes Cybertruck gets in there. Does anyone have a Cybertruck? Oh, darn it. Does this mean I can't make fun of the Cybertruck?
No, go ahead.
Okay. I must say, it is my least favorite vehicle of all time.
The technology is amazing.
The what?
The technology is amazing.
The technology is amazing. Unfortunately, I do make fun of the Cybertruck a lot, and most of my colleagues and a lot of my clients know it. Anytime they see one, they take a picture and text it to me. You have no idea how many pictures of Cybertrucks I have at this point, because they all send them to me.
I think Cybertruck buyers like that.
I think that that's actually part of it. I think, Roger, right, that you're kind of okay with this?
It's like the love-hate relationship.
It's going to be honest. I walk up to it, and I look at it, and I'm like, "Man, this thing is ugly." But I get in it, and it's big.
Yeah. The tech is fantastic. It is fantastic tech. Sorry, I just want to check my time.
You are 24.
Okay, perfect. Thank you. It is not the prettiest vehicle out there. I actually saw somebody who sent me a picture of one. It was like they mocked up a Cybertruck with corrugated metal and was like, "Hey, it is a camper, it is a truck. You can do it." It was great. Okay, I will stop making fun of the Cybertruck just for you. You are going to leave a review and say, "Oh God, she was awful. She hates my car." Okay. Right now, used vehicle sales on the EV side, we are doing really well. Chevy number two, because the Bolt has been out for quite a while. Ford with the Mach-E, it has been out for quite a while. So far through August, we have retailed over 422,000 used EVs. I think we will hit probably around 520,000 - 540,000 before the year is out.
Next year, it is going to grow even more. So really good inventory on the used EV front. Okay, affordability. It is funny because our Head of Investor Relations does not like me to talk about affordability, but you cannot not talk about affordability. It is the elephant in the room. So I disagree with her. I am like, "Okay, we got to talk about affordability because it is one of the key things kind of holding a lot of consumers back and shifting what and how we are buying, and also how lenders are financing." I like to start off with this little slide that talks about household income. So this is 2021 compared to 2026. Used car registrations on the left, new car registrations on the right. Notice the dark blue at the very top. These are households making over $200,000.
I kept the income buckets very, very broad. So we have $200,000, $100,000-$200,000 is the light blue, $75,000 to basically $100,000 is purple, $50,000-$75,000, and then the very bottom of each stack are households under $50,000. Notice it is shrinking for both new and used. So, the higher earning households are representing more and more of the car buying population, especially on the new car front. If you notice, we are now at over 50% of new car buyers have household incomes over $100,000. Quite a shift from the 44% from five years ago. So again, new car buyers, it is not your everyday average individual who is out there buying cars. We are also, again, seeing the same thing happen on used. So again, we are consolidating into higher and higher households.
Part of this is also because of the shifts in what consumers are buying. Again, 2021 compared to 2026, just by high-level vehicle segment. Does anyone in the room actually have a car versus an SUV? Only a couple. Who has an SUV? Most of the room. Exactly. That's what consumers want. That's what they're buying. It went from five years ago, 58%. Of course, also it's what manufacturers are making because that's where the consumer demand is. But now we're over 63% of new car buyers are buying the SUV/CUV. I always group them together, but no one really understands the difference between the two. Pickup trucks are also increasing. Vans, very small part of the market, but fewer and fewer manufacturers are making cars.
Part of that is what's kind of driving these very high loan amounts and these price points we see. The left-hand side are new cars in blue, average MSRP by vehicle segment, 2021 compared to 2026. Look at the growth and the increase in the average MSRP in five years across these vehicle segments. Cars, up 9.7% to $35,000, but no one's buying them because, one, there's not a whole lot of them being made. Again, SUV/CUV, biggest growth segment. In five years, it's up almost 18% from MSRP. Anyone with a pickup truck? Okay. Well, you can't count the Cybertruck as a pickup truck. Well, okay, you can.
There you go. Number one vehicle on the road, Ford F-150. But trucks, they have had one of the largest increases in MSRP. Again, it's about 16% of the market, but it's also number one, number two vehicle on the road. On the used car side, the increases are a little bit less in five years, mostly because the auction values were extremely strong when we had no new cars, so everyone went and bought used, and the auction values skyrocketed. This was when consumers could trade in their car and make money on it, which that just never happened. Auction values are still really strong. But still, we have some of the bigger increases occurring in the pickup trucks. To call your attention, the far left-hand side, 2021 average new, far right-hand side, average used value five years later.
If you're trading in your car, that's kind of giving you a little bit of insight on the residuals. Cars only worth about half their value five years later. SUV/CUV, they held their value a little bit better. We went from $38,000 - $21,000. The trucks held their value pretty well. Again, we went from $43,000 five years ago to about $28,000 now. Again, it just kind of gives you a little bit of insight into value then, value now. But this is why we're seeing some of these loan amounts increase so much, is because of the big MSRP increase. From a credit standpoint, this has been a very interesting year from a credit standpoint. Like I said, I've been doing these presentations since 2007. We very rarely have scores decrease. Average credit score of consumers continues to increase.
Average credit quality of your average consumer continues to increase. I think the bureaus, we have done a good job with credit education, all the credit cards. I mean, I am sure you all see when you get your credit card statement or log into your banking app, check your credit score. It is so pervasive now. I was at a fleet conference about a year, less than a year ago, and two guys from Toyota on the fleet side, they were so funny.
They were like, "Oh, you are with Experian?" They both whip out their cell phones, pull up the Experian app, and say, "We hold a competition to see who has the highest credit score, like on a weekly basis." It just killed me. Mine was higher, just FYI. But credit scores are going down for car buyers. Part of it is because we are seeing some growth in subprime.
I think the subprime consumer got locked out of the market for so long, they are coming back. Average credit score for new cars, it is down 2 points year-over-year. But again, five years ago, it was 744. If you look at it for a longer time period, it is still up, but the scores are decreasing. The used side has been really flat, and part of that is because, again, we have got more prime consumers moving into the used car space and buying older and older vehicles. So credit scores kind of dropping a little bit. Now, I mentioned the growth in subprime. I know a lot of lines going on. I do a lot of line charts. I used to do this as a stack bar, but I think it is a little easier to see as a line.
We have got the top of it, light blue, prime, then super prime. Notice those are both down, although historically, prime is up. The car buying population is a very prime population. But what is growing right now is subprime. So near-prime is up. Subprime, that lavender line, and deep subprime. Deep subprime is 500 and below. It is a very small part of the market, but it is increasing. I mean, it is soon to be doubled. But again, I have been doing this since 2007. It used to be like deep subprime was like 5% of car buyers. Now it is 1.3%. So it is a very small percent of the market, but growth is occurring in the subprime space. Now, where growth is also occurring is bank subprime. The left-hand side takes the various lender groups that we classify.
You got your banks, your buy here, pay here, and then there is a whole bunch of other lenders. It is like the lending population can be a hodgepodge. Captive, credit union, FinCo. Now, FinCo, of course, is very dispersed across the credit spectrum. You get a lot of subprime. Nobody does a whole lot of deep subprime, but that is mostly where you are going to see the deep subprime consumer is going to end up in the FinCo space. They are very good at it. They know how to manage a subprime population. But the right-hand side is the year-over-year increase for each of these. Now, FinCo shows increase across everything because they have just also picked up a lot of share, a lot of volume. But look at what is going on with the banks. Now, their deep subprime is a very small part of their market.
They do not do a whole lot of it. It barely shows up. It is like, I think, 0.2%. It looks up a lot because, again, it is a very small part of the market. But where they are really expanding is 500 - 600, which is subprime, and then near-prime, which is 600 - 660. Two of the biggest banks I was meeting with within the past two weeks, they each said, "Yeah, we are starting to focus on the 620 - 660 population." Part of it is they can do that because the analytics have gotten so much better. There is more alternative data. There is better credit scoring. You can combine all this and really cherry-pick kind of a subprime consumer who will not actually impose more risk on the portfolio. That is where we are seeing a lot of growth. Again, kind of speaking to affordability.
Average new loan amounts, I mean, just a three-year increase here. Again, if you were to look at 2019, average new loan amount was around $33,000. Now, we are approaching $44,000. Last month, we went over $44,000. The used car side also continuing to expand. All of up until Q2 of this year, the average used car payment had been hovering around $535, $533. We blew through that. We are now approaching, as you can see, almost $550. So $548, that is the entire used car market franchise independent as long as there is financing on it. Average new car payment, $773. Again, I can go back to my data tables from 2007, and it was like $400 and something. Somebody once asked me, "Hey, do you think $500 is going to be the cap of a new car payment?" No, we blew through that quickly.
We are going to hit $800 before too long. It is going to continue to increase, and the only trigger lenders have to pull is term. From a Q3 standpoint, on the new car side, the rates came down a little bit. Most of that was due to the incentives out there. But even a prime consumer, if it is not incented, they are seeing rates at 6%, which is why a lot of consumers are not going back to market because they are still sitting on car loans from five years ago at 2.9, 2.8. Even the prime consumer is very high rates. But the only other trigger to pull is term. So average term right now, 69 months on a new car. That is rather tremendous. 68 months on used. It used to be your average used car terms were at most 60 months.
There are some lenders that will not go beyond 48, especially on the older vehicles, but they continue to increase. Year-over-year right now, our increases in these loan amounts is accelerating at higher paces than it ever has been. The top of the chart is year-over-year growth in loan amount as a percentage as well as a dollar amount, and then below that is the quarter-over-quarter increase. I tend to do things more on a year-over-year basis just due to seasonality and when the incentives run and the specials and the new cars get launched. It is always going to make things goofy on the quarter-over-quarter. Even on the used side, also larger than normal increases in our used car loan amounts. Again, auction values are still holding up really well, but the loan amounts are still continuing to increase.
Now, on the positive, this is new and used car distribution by loan amount. There was a lot of press around Q2 about the lack of $20,000 vehicles, the lack of loan amounts that were under $20,000. There still remains only one vehicle that historically has an MSRP under $20,000. It is the Nissan Versa. The Mirage can sometimes fall under that, but based on the trim, it can get over $20,000. On the new car side, as you can see, most of the loan amounts are between $40,000 and $50,000. On the used, we still have just under a third of used loan amounts are under $20,000, so they are still there. On the new car side, that 7% tends to be highly incented, very large down payments, and it tends to be a lot of RAV4s and CR-Vs, which are very short inventory right now.
Now, on the payment side, this is always a fun slide. The media loves this slide. So $1,000 payments at the bottom of the slide. 19% of new car loans have payments over $1,000. 19%. Last quarter, it was 18%, so it is continuing to grow. If you go back five years ago, it was like 10%. Anyone want to guess what the number one vehicle with $1,000 payment on the new car side? Anyone? Anyone? Audience participation? What?
F-150. It is not the Cybertruck. It is the F-150. I am going to just pick on you now for the rest of the entire session. Yeah. The F-150, number one vehicle with a payment over $1,000. In fact, pickup trucks- Average payment of a pickup is $1,001. So, huge payments, and actually about 48% of all F-150 payments are over $1,000. So, it is continuing to grow. Do we see $1,000 payments on the used car side? Yes, we do. It is also F-150s, two, three year-old F-150s. So, on the franchise side, we get about 6% of payments over $1,000. The grand total will include private party. Now, the positive here, though, is we are still seeing, it is less than a third now, but we still see payments under $400 on the used car side. Unfortunately, to get to those, it is older vehicles.
I know, again, a lot of numbers on this one. But again, this is my vehicle age groups, new cars, late model used up to three years old, four to eight-year-old vehicles, nine plus. So, to get to that payment around $400, which used to kind of be the F&I number that consumers would go into the dealership and say, "Hey, I want to keep my payment around $400." Get out of that new car, get out of the late model used. You are in a nine, 10-year-old vehicle. Look at that sharp increase that we hit from 2020 to 2022. Once prices go up, they do not come down. I think everyone started to expect, hey, inventory on the new car side levels out. We are not getting those dealer markups on new. Prices will go down. They did not. Same thing on used.
Okay, new car inventory balances out. We are going to reduce the auction values. Used car prices will come down. They came down a little, but not much. Once prices go up, they do not drop. Just since pre-COVID, so 2019, you can see the biggest increase are those late model vehicles, because again, we did not have new car sales. It really drove up the prices of those late model vehicles, and they still just continue to increase. Is not that a happy slide? Okay, so term. Again, this is the only other trigger lenders have to pull to try to reduce the payments. So, 2021 compared to 2026, new cars on the left, used car on the right. So, in five years, usually the most common term out there is 72. That is the dark purple line. It is still almost the number one term for new cars.
But where the growth is occurring is in the longer term loans. So, that light blue for both new and used, look at that five-year increase. Well, on the new car side, it is not increasing as much because we are shifting into 85 +, but the growth is occurring in long-term loans. So, right now, our 73- 84 month term is almost a third of all new cars, and it is almost 31% of all used car sales. So again, we are talking six, seven-year terms. Where the growth is really occurring is also 85 +. Even in that light blue, the 73 - 84, you had a lot of lenders that would do 75. So, the credit unions, probably around 10, 12 years ago, started what they called 72 plus three, instead of just calling it 75 months, 72 plus three. I guess it sounded cuter.
So, you had a lot of loans at 75 months. Unfortunately, they do not perform very well because it is usually a consumer that cannot afford the payment at 72, so the lender tacks on a few extra months, brings the payment down. They do not perform as well. But a lot of lenders got very comfortable at 75. It used to be when you looked at the 73- 84, it was kind of split, 75 and then 84.
Now, more and more the loans are truly at 84, and we are also seeing lenders starting to explore 85. Yes, we do have 97 + out there. There is a couple specialty lenders that do 97 +. If you ask me afterwards, I will tell you who they are. But one is a very large credit union that happens to have Navy in it. I am really bad at keeping names secret.
So yeah, Navy Federal, a lot of 97 +, Woodside, Woodfield. But they specialize at that, and more and more lenders starting to do very long-term loans. But one thing also that the media likes to say is, "Oh, long-term loans. We are buying more nine, 10 year-old vehicles, ergo, long-term loans on old vehicles." No, that is not the case. So, this is the average age of the used cars by term groups.
Again, 21 compared to 26. Essentially, the dark blue, cars are getting older. We are financing older and older vehicles. But as you can clearly see, as we go up in term, the average age of the vehicle drops. So, lenders are not stupid. I mean, they are not going to do a 12 year-old vehicle at 84 months. Well, you will have some of that, but not a whole lot of it. So again, lenders, very savvy.
They're not going to do anything ridiculous when it comes to longer term loans, except for one or two. On the LTV front, we're starting to see the loan-to-value increase. We send our VINs over to J.D. Power, append MSRP for new, clean retail on used. The top line is the average MSRP on new cars. In the past couple years, it is increasing. It's nowhere like we saw in 2022 when, again, we had all the dealer markups and consumers were buying vehicles 10%, 15% over MSRP. On the new side, we're seeing the LTV increase. It's still historically lower than it's been five, 10 years ago. On the used car front, this is where the auction values are holding up very well. The average used LTV is actually down, and continues to decrease.
When you do look at the top 10 banks, or just the top 10 lenders on the used car front, their average LTVs are in the 90% for used cars. LTV is holding up very well. Again, the only downside to this is the LTV for both new and used vehicles does increase by term. Again, when you start getting to the 85-month term, LTVs are around 133%. For both new and used, it's very consistent across all of those term groups. Okay, so balances and delinquency. Average balances out there, we've got about $1.6 trillion in automotive balances on the book. It continues to increase around 2% year-over-year. Again, you kind of see a bigger increase from 2020 into 2022 when the loan amounts just increased so much. It's been a growth rate around 2% right now.
We hold a tremendous amount of balances in the book out there. The positive to that is most of the balances are prime. But look where the growth is occurring, those bottom three lines. That's where the growth is occurring, near-prime, subprime, deep subprime. Balances are increasing in those areas. Part of it is because, again, we've got consumers coming back to market who kind of were locked out of the market, and now they really just had no choice, and they're coming back into the space. But part of that increase in subprime is because of what we see here, delinquency. The one thing I do want to call out here is the year-over-year increases have slowed down. What we see here is 30 day delinquency on the left, 60 on the right.
Of this, the top on each of these are units, so the number of loans and leases that are delinquent. We've got around, I think it's around 93, 94 million automotive trade lines between loans and leases. Most of them are loans, of course. Of those, 0.97% are 60 days delinquent, upper right-hand side. So, 0.97%. But it's only a one basis point increase, so again, it kind of were at record highs here, but the growth rate is slowing down of the delinquency. The negative here is that 0.92% of that $1.6 trillion is also at 60 day default. Of that, around 34%, 35% will roll to the next highest status, so they'll roll into 90.
Another just under a third will stay where they are, and then surprisingly, what's increasing is the number of those 60 pluses that will actually cure back to a current status, and it's around 14%, which is kind of difficult to do. I mean, think about it, you're making up two payments. We're actually seeing two increases, an increase in the roll rate to the next highest status, and then an increase in curing back to current. Again, a little bit of a plus and a minus. With that, I think I have like 12 minutes for questions. We do put out three studies. They are free if you scan the QR code. The one I do is the State of the Automotive Finance Market.
If you're looking for pure vehicle registration, manufacturer, heavy metal fleet, et cetera, that's the report in the middle, Market Trends, and then we do a Consumer Trends that looks at demographics and things about car buyers. They're on our website. They're free. Feel free to grab them. They put out quarterly. With that, I think we can have time for questions.
That's terrific. Thank you very much.
Nobody fell under their table.
No.
So.
No, absolutely not.
That's good.
Again, please feel free to raise your hand and ask. I'll get it started. Given all the data, and I think I know where you're headed with this, you have been asked this question before, that was $500 the breaking point, is $800 the breaking point, is $900? Where do we finally see that sort of price elasticity come into play?
Yeah, I don't know if we ever really will. I mean, the SAAR this year, I think we're seeing 16.2, 16.5. Every forecast I've seen has been pretty consistent around that. I used to always say, when consumers are going to get stressed, you'll see a shift in what they buy, like on the new car side, or we'll see more cars. But we're also seeing more manufacturers come out with, or starting to put more emphasis around lower-priced vehicles. I've seen a lot of car commercials, I think I saw one from Toyota, really emphasizing how many under $30,000 vehicles they had, which was, I think, three. But it's interesting. Like I said, we used to see it at 500 is at the breaking point. I don't think there really is one.
But at that same time, we are seeing more consumers shift into used cars and older used cars for that affordability standpoint. But at the same time, cars are lasting longer. The warranties are fantastic. 100,000 mi is no longer the end cap. Even a lot of prime lenders who do start buying older, who used to say, "Hey, we won't do anything over 100,000 mi" now they're looking at that and going, "Eh, 140, 160." But I don't know if we're ever going to hit a breaking point on that.
Yeah, I made the point yesterday with one of our slides, if you go back to 2012, the average MSRP was somewhere around $30,000, and now it's $50,000.
Yeah.
And we're actually at a higher SAAR, because we were coming out of the great financial crisis at the time. It's very rare you see something cost 60% more and the same number of vehicles get sold. So, I'm wondering if there are any underlying demographic trends that are maybe, that you could share or that you know of that has expanded the available buyer pool to keep
Yeah
the new buyers higher.
The slide I did by household income, that was just of car buyers. But if you look at the U.S. population, it is a very similar pattern. If you look at some of the charts that some of the economists put out around disposable income and household savings, they are all up. Everything has increased. They are all starting to come down a little bit. We are starting to see a little bit more credit utilization. But the U.S. population overall tends to be a pretty healthy. I know we have got a lot of economic crises, and people disagree on some of those points. But again, the market is really that K-shaped economy.
The market is really being driven by the higher earning households, and that is what is keeping the market moving, which you might say positive, you might say negative, but as long as it keeps that market moving, it is also feeding the used car inventory and bringing cars back at more affordable price points for the rest of the population.
I see, Brooke. Could you talk a little bit about negative equity and sort of the trend you see? It seems like residual values are holding up fairly well despite longer loan terms, but maybe what the trend has been in the last 10 years.
Yeah. So, like I said, we look at LTV just from a VIN pattern base. Unfortunately, I do not get deal jacket data, so I do not have exact visibility into the negative equity. From everything I am hearing in the marketplace, though, is we are seeing increased levels of negative equity. I have not really seen or heard of lenders adjusting their back ends. So, they are not. Even when you hear lenders loosening up and buying a little bit deeper, buying older, they are keeping their PTIs and they are keeping their backend LTVs pretty steady. But that is a trend that I am increasingly hearing. However, if you go back and look at some of the negative equity data, and I think probably the best one I have seen is from Cox Automotive, they are able to get to some of those metrics.
If you go back and compare it to 15 years ago, it is a much healthier market today than what it was 15, 20 years ago. I still remember pre, I think it was in 2008, Automotive News had an article from a dealer who was kind of bragging about getting a consumer in a 72 month loan on an eight-year-old vehicle at 210% LTV. You do not really see that these days.
I think just overall, the health condition of the market, even though we are seeing more negative equity these days, a lot of that is due to the 2022 price increases. Again, you had consumers who paid $10,000 over MSRP. Most of those that went bad have already gone bad. They are falling off the books already. Well, they already have fallen off the books. But the longer term loans also increase the negative equity of deals coming back.
Usually takes an extra two, three months to break even on some of those. But overall, yes, it is increasing, but historically, I think it is still at pretty good rates.
Melinda, historically, what would give you the greatest pause and concern going forward for all of these metrics when you started to see some downtrends actually hit both the new and used market?
It is interesting because I would say probably around 10 years ago, I started really starting to express concern for the subprime consumer.
Because again, more and more new cars, SUVs, CUVs, more expensive vehicles, that shifts into a used car with higher price points, and your subprime consumer wants a car. They want affordability, which is why you also see a lot of Altimas. But the auto industry is a very stable marketplace. Even though we've seen some extremes, we've had the 2009 recession, we had the chip shortages, auto tends to recover very, very quickly. And I would say every quarter when I put these presentations out, usually a reporter asks me, "Was there anything concerning?" And I'm like, "It's been pretty consistent." It takes a lot to cause a big swing to the industry. I would say the two things that I continue to watch is what's happening with payments and term.
I think you get to a point, the next question I now get asked is, "Okay, it used to be $500, and now it's like, is 84 going to be the cap?" No. We blew through 84-month terms.
Right.
I don't know how many lenders are going to really go beyond that, because there's not a whole lot of it, but it really is the only other trigger to pull. I would say the two things I continue to watch is, well, lender share, because also as we increase delinquency, one of the things I get asked a lot is, "Does this mean lenders are pulling back?" And they're not. Obviously, Truist kind of really pulled back, sold off RAC, but most of the lenders out there are in growth mode. And again, they're starting to explore the 600 to 660 range. So lenders, despite increased delinquency, lenders are growing. The market continues to grow. Again, you got dealer groups starting dealer captives. It's a pretty consistent and pretty healthy finance space.
We, as a country, incented heavily the purchase of EVs for some time, not only in the new side, but also in the used. How much concern do you have, particularly as we start to see these EVs roll off leases, and EVs come into their second and third owners, who no longer have that tax credit? How concerned are you about the values and the numbers that are going to be sold?
From, like I said, most of the residuals I have seen do show that the EVs are not holding their value as well as some of the other fuel types. But at the same time, like I said, I think it is an opportunity for consumers to be able to move into an older vehicle or a late model vehicle who might not have been able to afford one outside of the EV space. It is interesting because I would say, five, eight years ago, you would see some lenders be very trepidatious about financing used EVs, and now we just do not see that. Unfortunately, it is not enough volume, and there has not been enough transactions to really do a tremendous amount of analytics around it. I would say there is a couple good company, like Recurrent, that does a lot of studies around EV batteries and such.
But I think we need more data on them. Unfortunately, there is just not been enough information on them.
Melinda, maybe I could follow up on that. When you look at the cost of ownership of a vehicle, depreciation is by far the biggest cost, right? And when you are talking about EVs, you are talking about depreciation that has far exceeded normal depreciation.
What you have seen is a lot of people thought fleet owners were going to continue to buy EVs because the cost of ownership would be below, but fleet operators or the folks that are managing the fleets have gotten lit up because their costs are really kind of banged up and much higher than they thought. When you think about the consumer and all these vehicle EVs coming off of lease, does the consumer think the same way that the logical fleet operator or owner would? Because a lot of people have gotten killed on these EVs, right? If they have bought them or they have leased them and they are on the hook for the residual, residuals are 30% as opposed to 50%.
Yeah.
It's pretty bad. How do you think that impacts sort of the psychology of those consumers that bought those EVs in the first place? I know it's nice that they're cheap in the secondary market, but that's a different kind of consumer.
Yeah, it is. There's a very big disconnect between the fleet and the consumer retail side when you look at EV. Your average consumer doesn't have that same fleet knowledge of what happened. Like Hertz, they got tanked on their EV purchases. It's very different, but that's also when you do look at the used EV market, it's very heavy cash, and other than that, it's a loan product. It's very heavy loan, it's very heavy cash. Carvana is like the number one retailer of used EVs. We see a lot of shift on that. So far, I've not really seen or seen any surveys or consumer sentiment that's negative on the used EV front. So, so far, it seems like it's a pretty healthy side.
You don't see any disruption in the lender side or the people that underwrote these leases that are going to take hits when they come back? It's not a big enough portion of the pie to really
Yeah, it's not. When you look at the lease front, like the hits on the residual, the EV leasing is a very small portion of those captives' book overall. So I think they can kind of afford to take that hit. Then, like I said, on the secondary market, it's a loan product.
Just to follow that idea, I know it's tax credit driven, or it seems like it's tax credit driven in terms of the new EV sale decline, but how much of it do you think might be, we're starting to see the first early adopters come out from their purchase, they've been hit with their residuals, and rather than re-enter that market, they've opted to go back out to the market. Can you separate out tax credit to sort of behavior from residuals?
It's interesting because unfortunately, I can't identify what purchase would have been applicable on a tax credit. But right now on the used EV side, we're already seeing two to three times turnover, mostly again Tesla. A lot of those consumers, when they dropped the prices a couple years ago, they've already taken that hit. It's interesting though, because when you look at loyalty rates, the EV market has the highest loyalty rate out of anything. Consumers that buy EV, they come back to market, they buy another EV. It's extremely high. I want to say Tesla, I think, has like 96% loyalty rates. That's kind of crazy. And leasing goes back to leasing. But very high loyalty rates for that. It's a popular product. Consumers that buy them just keep buying them.
Melinda, thank you. We're bumping up on time.
Yeah, we could get
But this has been wonderful. Thank you again for being here. I hope you join us again next year as well. This is your invitation already.
Yeah. Vegas during the Formula 1 race. What a great place to be. If ever you've been stuck on the Strip when they're closing the street to put up barricades, you know exactly what I'm talking about.
Thank you very much, Melinda.
Thank you.
And we'll see you soon.
Wonderful. Thank you.