Used Car Loan Length, Average Car Payment Hits All-Time High as Loan Terms Near 6 Years

Auto Loan Interest Rates And Delinquencies: 2017 Facts And Figures - Used Car Loan Length
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Used Car Loan Length – Image via www.debt.org

Used Car Loan Length – The average monthly loan payments taken by new car buyers reached a record $ 523 in the first quarter of 2018, up $ 15, or about 3 percent, from a year ago, according to credit tracker Experian. About 85 percent of new cars are purchased with financing, and the average payment track increases with the increase in sales of more expensive SUVs and also the increase in new car loan rates.

The average number of loans for new cars in the first quarter was $ 31,455, up $ 921 from a year ago. Meanwhile, interest rates averaged 5.17 percent, up almost a third point. Buyers also make higher payments for a long time, even though longer loans are not enough to keep the average payment from going up. The average loan period in the first quarter edged up to six years, increasing to 69.03 months. And three quarters of new car loans are 61 months or more.

Used Car Loan Length

New car rentals continue to be an attractive alternative to getting lower monthly payments. The percentage of all new leased vehicles declined slightly from last year but remained at almost 30 percent, and was used by more than a third of buyers with higher credit scores. Average rental payments were $ 436 in the first quarter, up $ 26, or around 6 percent, from last year.

Average loan payments for used cars also increased in the first quarter, but were more moderate than for new cars. The average payment is $ 372, up $ 9 or around 2 percent. The average loan length is not far behind the new car, however, at 64.23 months, and the average loan rate for used cars is 9.18 percent.

Another highlight of Experian’s country about the Automotive Finance Market Q1 2018 report:

While buyers borrow more, the rate of loans and rental delinquency seems stable after the recent increase. Loans and leases for the past 60 days were due to be stable from last year at 0.66 percent, while those that passed 30 days fell slightly to 1.9 percent.
Lenders write more loans and rents for better credit buyers. Shares for subprime and deep subprime buyers (credit scores of 300 to 500) declined, while increasing for prime and super prime buyers (credit scores from 661 to 850).
Credit unions increased their share of total loans and car rentals from last year to 21.3 percent, behind banks by 31.6 percent and automotive financing units by 29 percent.

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