Auto financing in 2016 [Video]
Posted on Monday, January 11, 2016 at 11:46:41 AM
The record auto sales of 2015 weren't driven on need and innovation alone. Auto financing played a big part in making new vehicles affordable to drivers, and in 2016, it appears to be set for a repeat. According to TransUnion's 2016 auto loan forecast, not only will delinquency rates remain flat - at 1.11 percent - throughout the year, but auto loan balances will grow.
In Q4 2015, loan balances hovered under $18,000. In the fourth quarter of 2016, they will reach about $18,500. By the end of this year, auto loan debt per borrower will have climbed more than $3,500 from late 2009, when the balance averaged just below $15,000.
Over the last five years, the amount of financed new car purchases has grown from 80 percent to 87 percent, according to Consumer Reports. Many of those loans have terms longer than the standard five years, with six year loans representing the new normal.
Drivers have taken to the longer loan terms because they keep monthly payments low. Today, the average loan payment is just $482 per month. The average amount financed, however, has grown at a higher rate.