Pricing Pressure

Average loan amounts have been dropping the past few months, as car buyers seek vehicles that better fit their payment abilities. The average new-car loan fell $606 to $24,176 in the first quarter, while the average used-car loan dropped $1,259 to $15,320, according to Experian Automotive. Meanwhile, average monthly payments were down $16 for new cars and $24 for used cars. Will those averages continue to decline, or might we have reached bottom as far as financing levels are concerned? Could it be that with so many people opting for used cars over new ones, prices might start to inch upward again?

Tags: loan, monthly, payment, pricing

Replies to This Discussion

Permalink Reply by Frank Rauscher on June 22, 2009 at 11:02am

This is a good observation. It may be too soon to tell if it is caused by:
a) A drop in the price of the average new car because of rebates, etc.
b) Financing companies requiring larger down payments for less than top credit scores
c) Buyers facing the new reality of buying only what they can really afford
d) No longer culturally necessary to keep up with Jones and buy a better car than they have.
e) Monthly income expense ratio analysis forces a lower amount financed if the lender wants a higher rate for the increase risk of the deal.
f) Savings rates in the US have increased dramaticly and this would mean that less money is being spent on goods which supports your observation that people are buying "Used" vs "New".

Permalink Reply by Marcie Belles on June 22, 2009 at 2:48pm