Average Used Vehicle Loan Amount Reaches Record High in Q2 2021

The average used vehicle loan amount hit a record high in the second quarter of 2021, reaching $23,365 (up from $21,357 in Q2 2020). The rise in prices comes as the global semiconductor shortage is leading to a reduced supply of microchips, forcing many car makers to suspend or delay production.

Along with the loan amount increases, the average monthly payment reached $430 in Q2 2021, up from $397 in Q2 2020, and the average loan term rose to 65.88 months. However, Experian noted that consumers are managing the increases well.

Although used vehicle prices are rising, loan-to-value (LTV) ratios are dropping, with a 10 percent drop from 120.83 percent in Q2 2020 to 108.43 percent in Q2 2021. This is a significant decline, considering the average used LTV was 120.77 percent in 2019, before the COVID-19 pandemic shook the industry.

Stronger trade-in values amidst high prices and limited inventory is a likely explanation for the LTV decline, as consumers often have more money to put down toward a new transaction, which helps to put them into positive equity on their vehicle more quickly. 

Experian also looked at delinquency rates, which have remained stable year-over-year and dropped since Q2 2019. 30-day delinquencies were 1.31 percent in Q2 2021, falling from 2 percent in Q2 2019. 60-day delinquencies dropped from 0.62 percent in Q2 2019 to 0.41 percent in Q2 2021.