The Consumer Bankers Association’s 2002 Automobile Finance Study shows a shift from leasing to loans.

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While some measures show a decline in average vehicle prices, the average new loan size increased from $US19,705 to $20,656, about a 5% jump. Loan maturities increased, and 82% of new vehicle loans were over four years.


Year-to-year growth was measured for 11 of 41 survey respondents, who reported a growth in loan origination dollars of 22.4%, compared to 8.3% in 2001. Four of the 11 were captive finance companies, so growth likely reflects heavy use of financing incentives.


Automated loan decisions increased from 18% to 26% of all application decisions, which speeded turnaround time.


For the first time, average credit bureau scores were slightly higher for used vehicle loans, at 692, compared to new vehicle loans, 680.

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Lessors became more conservative in setting residual values, reflecting continued heavy losses. Lease terms are based on the estimated residual value of the vehicle at lease-end, as estimated in guidebooks. Last year, 38% of new leases were below guidebook values, compared to 3% a year earlier.


However, losses remained high as leases expired. For full term vehicles returned to lessors, the average loss increased to $2,451, from $2,342 a year earlier and $1,920 two years ago. Longer term leases are becoming more popular, with leases of five years or longer growing to 28% from 17% a year earlier and 12% two years ago.


The survey measures activity at year-end 2001, and was prepared for CBA by BenchMark Consulting International of Marietta, Georgia.