Consumers paying more, over longer terms, for their cars
Posted on Thursday, June 4, 2015 at 12:19:51 PM
These days consumers are willing to pay more for their cars, and over a longer period of time.
Higher prices and flashy options aren't scaring customers off, according to research from Kelley Blue Book. Particularly in regard to trucks, consumers are willing to pay more than they have before for their vehicles. In April, the average transaction price for new cars and trucks was $33,560, up $836 from last year and $195 from March.
Year-over-year, the largest ATP increases were seen by Ford Motor Company, General Motors and Hyundai-Kia, in that order.
Perhaps one reason consumers are willing to pay more than they had before is that they are willing to extend their payments beyond what they had in the past. According to research from Experian, the average loan term for new and used vehicles increased by one month in the first quarter of 2015.
Traditionally, consumers preferred large down payments, the information services firm explained. Covering 20 percent of the vehicle's total price from the get-go, then paying off the rest of the cost over 48 months was common for automobile buyers. The approach to auto financing has changed though. Payment periods extending between 73 to 84 months made up 29.5 percent of all new vehicles financed. As the cost of cars increase substantially, consumers are turning to these drawn-out terms to ensure they can afford both down payments and monthly charges.