By Wolf Richter for WOLF STREET.
Total balances of auto loans and leases for new and used vehicles rose by 1.1%, or by $18 billion in Q3 from Q2, and by 3.1% year-over-year, to $1.64 trillion, according to data from the New York Fed’s Household Debt and Credit Report.
But the 3.1% year-over-year growth rate was the second-smallest since Q1 2021, behind only Q2 this year (2.8%) and the third smallest since Q4 2018.
One of the reasons balances grew at a relatively slow rate is that more people are paying cash for their vehicles due to the higher interest rates. For new vehicles, the share of cash purchases rose to 20% in recent quarters, from 18% in Q1 2022. For used vehicles, the share of cash purchases rose to 64%, from 59% in Q1 2022, per Experian data. We’ll look at other reasons for the slower increase in a moment.