Auto Leasing Loans and Sales Financing
Business for Sale Industry Economics
2002 - 2020
2020 - 2026
In the first five years leading up to 2020, the Auto Leasing Loans and Sales Financing industry have seen increased demand as a result of continued macroeconomic growth.
Consumers are more active in this sector because they perceive future income stability.
Additionally, lower interest rates reduce borrowing costs and stimulate larger purchases, increasing retail demand.
Growing consumer confidence and declining unemployment translated into higher auto purchases and steady car prices for the majority of the five-year term.
The provision of longer loan terms and historically low interest rates aided the car purchasing force, resulting in strong auto sales in the United States in 2016.
According to Cox Automotive Inc., automakers sold 17.0 million new cars and light trucks in 2019, a slight drop from all-time highs set in 2016.
The Auto Leasing Loans and Sales Financing industry has benefited from strong economic conditions and record vehicle sales for the majority of the five years leading up to 2020.
While historically low interest rates fuelled demand for industry loan products in each of the years leading up to 2019, rising per capita disposable income increased access to credit.
As a result, the US car industry set new sales records in 2015 and 2016, before dropping slightly to 17.1 million in 2017 and 17.0 million in 2019.
High demand for new cars fueled demand for car loans for the bulk of the period.
The average age of cars on the road in the United States hit an all-time high of 11.8 years in 2019, leading more consumers to start replacing older vehicles.
Over the next five years, the Auto Leasing Loans and Sales Financing industry is expected to resume steady expansion.
As worries about the spread of COVID-19 (coronavirus) fade, macroeconomic conditions are expected to strengthen once more during the timeframe.
In the five years leading up to 2025, per capita disposable income is forecast to rise by 2.3 percent on an annualized basis.
Consumers will be more confident with their financial security as a result of this, and they will have the courage to make large investments like purchasing a car.
As a result, new car sales are forecast to rise by an annualized 8.1 percent over the five years to 2025, after a dramatic decline only prior to that time.
Furthermore, as macroeconomic conditions change, interest rates are likely to steadily increase, allowing operators to expand high-interest-rate loans during this period.
Consumers would not be deterred from buying cars by rising interest rates, as rates are projected to remain well below their historical average despite fluctuations over the timeframe.
Over the five years to 2025, business revenue is forecast to grow at an annualized rate of 4.6 percent to $145.5 billion.
This sector includes businesses that do car sales finance or lending in addition to car sales financing.
Sales finance companies usually lend money to provide collateralized products through a contractual installment sales plan, either directly from or through agreements with dealers.
Tax and fees are used with creditors’ installment installments, which create money for industry members.