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CBA Study Reveals 40% of Car Loans Exceed 60 Months

The trend of longer indirect loan terms (especially over 60 months) is continuing, according to the Consumer Bankers Association's (CBA) 2004 Automobile Finance Study.

by Staff
June 3, 2004
2 min to read


The trend of longer indirect loan terms (especially over 60 months) is continuing, according to the Consumer Bankers Association's (CBA) 2004 Automobile Finance Study. Forty percent of loans were longer than five years, compared to 34 percent a year earlier. Five-year loans declined from 50 percent to 45 percent, as consumers sought longer terms. The average new loan size increased 6 percent to $23,076, from $21,779 a year earlier. Trends from this year's study indicate that indirect loan portfolio dollars and originations are slightly down from last year. For instance, 37 indirect loan respondents (about 80 percent of the respondent pool) indicated a 1-percent smaller portfolio, on average, and a 2.6 percent decline in origination dollars, year-over-year. Captive finance companies, controlled by the manufacturers, reported approving 5-percent fewer indirect loan applications, on average. Forty-nine lenders and lessors participated in the survey, conducted for CBA by BenchMark Consulting International, Atlanta. Average new-vehicle loan dollar delinquencies decreased to 1.19 percent compared to 1.58 percent, last year and average new-vehicle account delinquencies followed the same pattern with a declining trend of 1.54 percent from the previous year's reported average of 1.73 percent. Processing time for loan decisions declined to 24 minutes, from 32 minutes a year earlier. Fifteen lease respondents (88 percent of the respondent pool) reported a slight decline in portfolio dollars of 1.4 percent. Six lease respondents (35 percent of the respondent pool) reported a .2-percent cumulative decline in originations year-over-year, but cumulative lease origination volumes as reported by 76 percent of respondents were off last year's volumes as follows: 9-percent fewer applications were received; 6-percent fewer approval decisions were made; and 4-percent fewer bookings were made. About half (51 percent) of units coming 'off lease' reached full term, compared to 63 percent last year. Lessors reported losses on 82 percent of lease returns and a gain on the remaining 18 percent, which is a marked improvement over the prior three years when only 4 to 5 percent of units were returned at a gain. Lease dollar delinquencies increased by 27 percent year-over-year (1.89 percent this year from 1.49 percent last year). Gross credit losses in 2004 increased by 18 percent to 1.17 percent from last year's average of .99 percent. Net credit losses increased to .95 percent this year, from 0.80 percent in 2003. Repossession rates increased to 2.09 percent from 1.6 percent reported in last year's study.

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