Americans owe a record $1.1 trillion in car loans, a new report has found.
According to Experian’s State of the Automotive Finance Market report released late last week, auto loans have increased primarily due to the rise in loans to prime buyers while subprime and deep subprime originations continue to decline.
Automotive News reports that many U.S. residents prefer to minimize monthly repayments and therefore adopt longer term loans than perhaps necessary. Heading into the third quarter, the average new-vehicle loan was 68.8 months and the average used-vehicle loan has increased by one week from a year ago to 63.98 months.
There are also an increasingly high number of people opting for long-term loans between 85-96 months for new vehicles while 17.7 per cent of used car buyers are selecting 73-84-month loans.
Alongside the rising loan terms, average monthly payments continue to increase and hit a second quarter high of $504 this year, $5 more than the previous year.
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