Consumers continue to purchase crossovers at an impressive rate and this has helped to drive the average cost of new vehicles to record levels.
According to the latest State of the Automotive Finance Market Report by Experian, the average new vehicle loan has climbed $921 to hit a record of $31,455. This, in turn, pushed the average monthly new vehicle loan payment up $15 to a record of $523.
In order to cope with the higher payments, American consumers are opting for longer and longer loan terms as the average new vehicle loan for the first quarter of 2018 was slightly more than 69 months (5.75 years). The most common loans were for 72 months (6 years) but there were an increasing number of loans lasting 85 to 96 months (7 to 8 years).
Buyers looking for lower payments often shop for used vehicles but the story is largely the same. Despite being more affordable then new cars, the average loan for used models hit a new record of $19,536.
Given these increases, it comes as little surprise that American consumers owe a record $1.108 trillion in outstanding loan balances.
Lenders becoming more cautious but delinquencies drop
The numbers of loans to consumers with bad credit histories dropped 8.4 percent in the first quarter in what the credit agency says is a “sign that some lenders have become more risk-averse.” As Experian notes, the average credit score for a new vehicle loan rose to 716.
Despite lenders becoming more cautious, the number of consumers behind on their vehicle payments has dropped. 30 day delinquencies are down 3.1 percent to 1.90 percent while 60 day delinquencies remained unchanged at 0.67 percent.
According to Experian’s senior director of automotive financial solutions, Melinda Zabritski, “The dream of owning a new vehicle is becoming more elusive to the average American.” She added dealers and lenders need to “explore different options to make new vehicle ownership accessible and appealing.”
H/T to Jalopnik
