That’s the news from Experian Automotive, which released its latest “State of the Automotive Finance Market report” today.
During the first quarter of 2014, average auto loan terms reached 66 months for the first time since Experian started reporting the data back in 2006. In fact, analysis of auto finance data shows that loans with terms extending out 73–84 months made up 24.9% of all new vehicle loans originated during the quarter, growing 27.6% since Q1 2013.
That might have something to do with the price of cars.
The average amount financed for a new vehicle loan also reached an all-time high of $27,612 in Q1 2014, up $964 from the previous year. And, the average monthly payment for a new vehicle loan reached its highest point on record at $474 in Q1 2014, up from $459 in Q1 2013.
“As the cost of purchasing a new vehicle continues to rise, consumers clearly are stretching the loan term to help lower monthly payments, keeping them at a manageable level,” said Melinda Zabritski, Experian Automotive’s senior director of automotive credit in a company release.
She said while the benefit of a longer-term loan is the lower monthly payment; the flip side is that consumers can find themselves paying more in interest or being upside-down on their loan if they seek to trade their vehicle in early.
Meanwhile, Experian also said consumers were leasing vehicles at record levels. Of all new vehicles financed, 30.2% were leased in Q1 2014, compared to 27.5% in Q1 2013.
Of all new vehicles sold -whether financed or purchased in cash- one in four, or 25.6%, were leased in Q1 2014, compared to 22.9% in Q1 2013.
Experian called that number “staggering.”
Average credit score were down to 714, compared to 722 in Q1 2013. For leases, the average credit score was 721 in Q1 2014, compared to 731 in Q1 2013.Like This Post