Monthly auto loan payments and terms each increase in second quarter
Posted on Monday, August 31, 2015 at 2:56:30 PM
With strong demand for auto financing ongoing, both monthly payments and term lengths for car loans grew through the second quarter.
The average monthly payment on a new vehicle rose 3.4 percent year-over-year to $483, Experian Automotive's second-quarter State of the Automotive Finance Market report stated. For a used car, the average monthly payment also ticked up 1.7 percent over the same period last year to $361. The monthly cost of purchasing a new vehicle has driven many consumers to turn to leasing.
"Leasing keeps those payments lower when you can get the same vehicle for $100 less per month," Melinda Zabritski, Experian's senior director of automotive finance, told Automotive News. "If prices continue to rise, new vehicles may become out of reach to the average consumer unless they shift into a lease."
Loan terms also increased through the second quarter of the year. The average new-vehicle loan term increased one month year-over-year from 66 to 67, the report noted. For used cars, the average loan term also increased on a month-over-year basis, from 61 to 62.
Zabritski explained to Automotive News that the reasons loan terms haven't offset increasing monthly payments are rising interest rates and that "loan amounts are outpacing the length of the term."