More than a $200 difference in average loan and lease payment for non-luxury EVs

With electric vehicles (EVs) continuing to become a viable option for prospective vehicle shoppers, one trend stands out: EV buyers opting to lease. According to Experian’s (LSE: EXPN) State of the Automotive Finance Market Report: Q4 2024, more than 50% of new EV purchases were leases, and EVs accounted for nearly 20% of all new vehicle leases during the quarter. By comparison, EVs only made up 2.11% of new vehicle leases in Q4 2020.

“Leasing has always been a cost-effective alternative for consumers hoping to drive away with a more palatable monthly payment—EVs are no different,” said Melinda Zabritski, Experian’s head of automotive financial insights. “But it’s not just affordability. Leasing offers consumers the opportunity to buy an EV without worrying about the potential resale value down the line. With many EVs set to come off-lease in the next few years, it will be interesting to see how the used EV market unfolds.”

While the difference between the average monthly loan and lease payments are significant ($142), the difference in the average monthly loan and lease payments for EVs is even higher. In Q4 2024, the average payment difference between a loan and lease across all EVs was $175. Interestingly, non-luxury EVs generated the greatest payment difference at $205, meanwhile the difference between the loan and lease payment for luxury EVs was only $98.

Among the most leased EVs, the Tesla Model 3 continued to maintain its lead at 12.20%, followed by the Tesla Model Y (9.08%), Honda Prologue (8.84%), Hyundai IONIQ 5 (6.88%) and Chevrolet Equinox EV (5.92%). The Tesla Model 3 (2^nd), Tesla Model Y (5^th) and Honda Prologue (6^th) were also among the top 10 of all leased vehicles.

Is the market shifting back to new?

Expanding beyond the EV market, the report showed more financing is comprised of late-model vehicles (model years up to three years old). More than 66% of loans were for vehicles up to three model years old in Q4 2024, up from 63.92% the previous year.

Part of the shift could be attributed to lower interest rates and average monthly payments for new vehicles. While the average loan amount for a new vehicle experienced a modest increase during the quarter reaching $41,572, up $1,088 from the previous year, the average monthly payment decreased $1 to $742. The stability in average monthly payment is likely driven by the decrease in interest rate during the quarter. In Q4 2024, the average interest rate for a new vehicle was 6.35%, down from 7.16% a year ago.

Meanwhile, the used vehicle market observed positive trends among financing attributes. The average loan amount for a used vehicle decreased $344 year-over-year to $26,468 and the average monthly payment dropped $10 to $525 over the same period. Similarly, the average interest rate declined from 11.97% to 11.62%.

Despite the lower average loan amounts and monthly payments, all risk segments experienced declines in used vehicle financing.

“With manufacturer incentives, the continued resurgence of leasing and lower interest rates, we’re seeing consumers across the board shift back into the new market,” continued Zabritski. “That said, the market remains fluid. Similar to EV market, as vehicles come off lease over the next 2-3 years and late-model vehicle availability increases, how will that impact consumer purchasing behavior?”

Additional findings for Q4 2024:

• 30-day delinquencies increased from 3.08% in Q4 2023 to 3.17% in Q4 2024, while 60-day delinquencies rose from 0.96% to 0.99% over the same period.
• The percentage of used vehicles with financing reached 36.50% in Q4 2024, down from 38.72% a year ago.
• The average credit score for a new EV declined from 773 in Q4 2023 to 767 in Q4 2024.
• Bank market share for new vehicle financing grew to 24.83%, up from 20.17% the previous year. Meanwhile, banks saw their market share of used vehicle loans increase from 26.10% in Q4 2023 to 28.68% in Q4 2024.
• More than 30% of prime and super prime consumers are choosing to lease.

To learn more, watch the entire State of the Automotive Finance Market Report: Q4 2024 presentation on demand.

About Experian

Experian is a global data and technology company, powering opportunities for people and businesses around the world. We help to redefine lending practices, uncover and prevent fraud, simplify healthcare, deliver digital marketing solutions, and gain deeper insights into the automotive market, all using our unique combination of data, analytics and software. We also assist millions of people to realize their financial goals and help them to save time and money.

We operate across a range of markets, from financial services to healthcare, automotive, agrifinance, insurance, and many more industry segments.

We invest in talented people and new advanced technologies to unlock the power of data and innovate. As a FTSE 100 Index company listed on the London Stock Exchange (EXPN), we have a team of 22,500 people across 32 countries. Our corporate headquarters are in Dublin, Ireland. Learn more at experianplc.com.

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