As car loan amount reaches record high, loans are longer
As the sales articles at the beginning of this issue of the Bulletin note, transaction prices on new vehicles are still increasing. The increasing numbers of consumers who want to buy more expensive SUVs and light trucks are paying more and stretching the loan out over more months. The latest evidence of that trend comes from Experianês State of the Automotive Finance Market.
The average loan amount for a new vehicle reached a record high of $30,621 in fourth quarter 2016, according to Experian. The amount for a used-vehicle loan also reached a record of $19,329.
To pay those big loans, more consumers were opting for terms of 73 to 84 months. The number of new vehicle buyers with those longer loans rose from 29 percent of the market in fourth quarter 2015 to 32 percent in fourth quarter 2016. The number of used buyers with the longer loans increased from 16 percent to 18 percent.
There is now a record $11,000 gap between the average loan amount on a new and used vehicle, said Melinda Zabritski, Experianês senior director of automotive finance. This upward trend is causing many consumers to find alternative methods like extending loan terms, getting a short-term lease or opting for a used vehicle to get what they want while staying within their monthly budget.
For consumers who still want to drive something new, leasing a new vehicle costs an average of $92 less per month compared with financing $414 versus $506. The number of consumers leasing a new vehicle hit nearly 29 percent in the last quarter. The average monthly payment for a used vehicle loan was quite a bit lower, at $364.Download Bulletin PDF