With electric vehicles (EVs) continuing to become a viable option for prospective vehicle shoppers, Experian found one trend that is standing out: EV buyers opting to lease.
Experian’s State of the Automotive Finance Market Report: Q4 2024 detailed that more than 50 percent of new EV purchases were leases, and EVs accounted for nearly 20 percent of all new vehicle leases during the quarter. By comparison, EVs only made up 2.1 percent of new vehicle leases four years earlier.
The report also looked at financing of used and new vehicles as well as rising payment delinquencies.
EV Leasing
Melinda Zabritski, Experian’s head of automotive financial insights, explained that leasing has always been a cost-effective alternative for consumers hoping to drive away with a more palatable monthly payment and EVs are no different.
“But it’s not just affordability,” said Zabritski in a statement with the report’s release. “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.”
Monthly Payments
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.
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 percent, followed by the Tesla Model Y (9.1 percent), Honda Prologue (8.8 percent), Hyundai IONIQ 5 (6.9 percent) and Chevrolet Equinox EV (5.9 percent). The Tesla Model 3 (2nd), Tesla Model Y (5th) and Honda Prologue (6th) were also among the top 10 of all leased vehicles.
Impact of Lower Interest Rates
As for the overall market, the report showed more financing is comprised of model years up to three years old. More than 66 percent of loans were for vehicles up to three model years old in Q4 2024, up roughly two percentage points the previous year.
The move comes as the average monthly payments for new vehicles with interests rates dropping—the average interest rate for a new vehicle was 6.4 percent, down from 7.2 percent a year ago.
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, according to Experian officials.
Comparatively, 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 to 11.6 percent from 12.0 percent.
Additional Report Details
The report raised concerns about the economy as a whole as 30-day delinquencies increased 3.2 percent from 3.1 percent in Q4 2023 to in Q4 2024 and 60- day delinquencies rose to 0.99 percent from 0.96 percent over the same period.
Other highlights from the report include:
- The percentage of used vehicles with financing reached 36.50 percent in Q4 2024, down from 38.7 percent a year ago.
- Bank market share for new vehicle financing grew to 24.8 percent, up from 20.2 percent the previous year. Meanwhile, banks saw their market share of used vehicle loans increase from 26.1 percent in Q4 2023 to 28.7 percent in Q4 2024.
- More than 30 percent of prime and super prime consumers are choosing to lease.
Zabritski offered that 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. 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?”
