Loan terms are longer than ever Experian

Loan terms are longer than ever Experian

Average loan terms for new and used vehicles have reached new records of 67 and 62 months, respectively, according to a new report by Experian Automotive.

Longer loans, those with terms lasting 73 to 84 months, are now a bigger portion of the market than ever, at 29.5 percent of all new vehicles financed. Long-term used-vehicle loans also broke records, with loans of 73 to 84 months making up 16 percent of the market.

–While longer term loans are growing, they do not necessarily represent an ominous sign for the market,” said Melinda Zabritski, Experianês senior director of automotive finance. –However, it is critical for consumers to understand that if they take a long-term loan, they need to keep the car longer or could face negative equity should they choose to trade it in after only a few years.”

The average amount finance and average monthly payment for a new vehicle also increased to record highs.