By Peter Rudegeair

NEW YORK -- A record number of U.S. consumers are taking out loans to buy cars, especially those purchasing used vehicles, according to data released Wednesday.

In the second quarter, 85 percent of new car purchases and 53.8 percent of used car purchases were financed, according to data from Experian, an information provider.

That was up 0.5 percentage points and 0.9 percentage points, respectively from the same period in 2013.

Additionally, the size of auto loan amounts and monthly payments continued to rise, especially for used cars. Since the second quarter of 2013, the average used vehicle loan rose 1.9 percent to $18,258 and the average monthly payment on such vehicles rose 1.1 percent to $355, both all-time highs.

"More and more consumers, especially those that are credit challenged, are turning to the used vehicle market as a viable option to purchase their next car," said Melinda Zabritski, senior director of automotive finance for Experian, in a statement.

Banks were the largest lenders to consumers buying used cars, financing 35.6 percent of all such purchases, or 0.8 percentage points less than the second quarter of last year.

In recent years banks have begun to focus more on the used car market as automakers' in-house financing arms came to dominate the new car market. Such "captive" finance companies made more than one out of every two new car loans in the second quarter, according to Experian.

Regulators have become more concerned with banks' willingness to lengthen terms on car loans, lend to borrowers with lower credit scores and give out loans that are larger than vehicles are worth.

In addition, the U.S. Department of Justice has started investigating subprime auto loans that companies such as General Motors' (GM) auto financing arm and Santander Consumer Holdings USA have made and securitized since 2007.

But at least in the second quarter, the share of both new car and used car loans that went to borrowers with subprime credit scores declined, according to Experian.

"Lenders are still showing cautionary signs when lending to the subprime market and keeping their risk at manageable levels," Zabritski said.

Wells Fargo (WFC) remained the largest U.S. auto lender in the second quarter with a market share of 5.75 percent, down from 5.89 percent a year prior.

Capital One Financial (COF) surged past JPMorgan Chase (JPM) to become the third largest U.S. auto lender after Ally Financial (ALLY). The McLean, Virginia-based bank's share of the used car market rose from 3.77 percent to 4.20 percent.

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$18,000 for a loan to buy a used car????? Signing up for that is a pretty good example of "crazy".

The good news is that nearly half of used car buyers were smart enough to save up and pay cash for their purchase.

September 03 2014 at 11:39 AM Report abuse rate up rate down Reply
2 replies to Valerie's comment

I dont know anyone who has 18,000 sitting around in the bank, welcome to the middle class. They got us all bent over the sugar barrel.

September 03 2014 at 12:19 PM Report abuse rate up rate down Reply
1 reply to darbrow717's comment

Who is they, and why do you willingly bend over?

September 03 2014 at 9:46 PM Report abuse rate up rate down

I thought the same thing. The last 4 new cars/trucks we bought were less than that with factory rebates, credit card rebates, etc , etc. I bought a new Saturn *when they were going out of business for just over 1/2 MRSP (after all the rebates they gave and I had). That was about $3k less than a 2 year old used ones. Never financed any cars in my life, crazy. If you have $2,000 in your pocket, then you buy a car for $1950 and $50 for a repair manual.

September 03 2014 at 12:24 PM Report abuse rate up rate down Reply