Drivers were shifting away from leases and opting to purchase a vehicle instead at the beginning of 2018 even as loan balances hit a record high, according to a report from the credit bureau Experian.

In its latest quarterly auto financing report, Experian found that 29.83 percent of new vehicle transactions were leases. This was down from 31.06 percent in the first quarter of 2017. Leases were slightly more prevalent in the used market, rising from 3.71 percent of transactions in the first quarter of 2017 to 4.01 percent.

A total of 35.9 percent of prime and super prime borrowers, with credit scores of 661 or higher, opted to lease, down from 37.4 percent in the previous year. Nonprime borrowers, with credit scores of 600 to 660, were also less likely to lease. Their share fell from 34.1 percent to 32.6 percent.

The move toward loans occurred even as drivers were paying record high amounts for both new and used vehicle. The average loan balance for a new vehicle in the first quarter of 2018 was $31,455, a year-over-year increase of $921. The typical used vehicle payment grew by $410 to $19,536.

The average monthly payment for a new vehicle loan was $523, up $15 from the previous year. The typical lease payment increased $26 to $436 a month, while the average used vehicle payment went up $9 to $372.

"The dream of owning a new vehicle is becoming more elusive to the average American," said Melinda Zabritski, senior director of automotive financial solutions at Experian. "To reverse the trend, dealers and lenders need to better understand the data and explore different options to make new vehicle ownership accessible and appealing."

Most buyers were opting for longer terms to keep monthly payments more affordable. The typical new vehicle loan term was 69.03 months, while the average lease extended 36.53 months. A total of 41.3 percent of new vehicle loans were for a period of 61 to 72 months, while 33.6 percent went for 73 to 84 months.

Used vehicle loan periods were also lengthy, with the average borrower repaying their loan over 64.23 months. A total of 40.7 percent of used loans had a term of 61 to 72 months, while 23.1 percent were for 49 to 60 months.

Rates also climbed slightly from the previous year. The typical new vehicle loan had a rate of 5.17 percent, while the average rate for a used vehicle loan was 9.18 percent.

Most new vehicle transactions required financing, with 85.3 percent of drivers who bought or leased a new vehicle borrowing money. Fifty-four percent of used vehicle transactions were financed.

The auto market continued to favor borrowers with higher credit scores. The average borrower who bought or leased a new vehicle in the first quarter of 2018 had a credit score of 719, up two points from the previous year. The average score for a used vehicle transaction increased three points to 655.

In the risk distribution for loans and leases for new vehicles, three-quarters of loans or leases—74.97 percent—were approved for prime or super prime borrowers, up from 74.03 percent in the first quarter of 2017. The nonprime share fell slightly, from 16.53 percent to 16.25 percent. A total of 8.78 percent of new loans and leases went to subprime or deep subprime borrowers, down from 9.44 percent.

In the used market, 48.15 percent of the risk distribution was prime or super prime – up from 47.43 percent in the previous year. The nonprime share increased from 21.27 percent to 21.57 percent, while the subprime share fell from 31.3 percent to 30.28 percent.

"Traditionally, lenders' risk tolerance has swung back and forth like a pendulum, and right now we're seeing a more risk-averse side," said Zabritski. "But if payments continue to improve, we could see credit standards loosen. The more insight lenders have into consumer credit behavior, the better decisions they can make."

The outstanding balance of auto loans in the United States continued to set new records, although this growth was slowing. The balance for the first quarter of 2018 stood at approximately $1.11 trillion, up 2.33 percent from the previous year. The annual increase in the outstanding balance was 7.82 percent in the first quarter of 2017 and 11.06 percent in the first quarter of 2016.

Delinquencies showed signs of improvement. A total of 1.9 percent of outstanding loans and leases were delinquent by 30 days, down from 1.96 percent in the previous year. The share of 60-day delinquencies held at 0.67 percent.