More consumers are purchasing new and used cars with auto loans, and those loans are for higher amounts and longer terms, according to Experian Automotive’s latest State of the Automotive Finance Market report.
The study found that 84 percent of new cars were purchased with financing in the fourth quarter of 2014, while used cars being financed was at 55.2 percent, also a record high.
The average loan amount for a new car during that time period was also at a record high — $28,381, which represents a $950 increase from a year ago. The average length of new car loans rose to 66 months. Consumers took out loans for $18,411 on average for used cars, an increase of $437 from last year, and loan terms were 62 months on average.
“As more consumers lean on financing, it’s important for them to consider all of the factors involved, including monthly payments, interest rates and loan terms,” said Melinda Zabritski, Experian’s senior director of automotive finance. “These insights will enable them to have a better understanding of their potential payment obligation and take the appropriate action in order to make the vehicle fit within their monthly budget and more easily meet payment terms throughout the life of the loan.”
More car leasing
Consumers also are leasing more cars, currently representing nearly 30 percent of all new vehicles financed in the fourth quarter of 2014, an increase of 3.6 percent compared to a year ago. The average monthly lease payment was $408 for the fourth quarter of 2014, a decrease of $12 from the prior-year period.
The Experian Automotive data showed a mixed bag in terms of credit scores. Consumer with new car loans had an average credit score of 712, a decrease of three points, while consumers with used car loans had an average credit score of 648, an increase of two points. Leasing consumers had the highest average credit scores, 717, though that represented a two point drop over the same time period.
Wondering how much the monthly payment on your next car loan with be? Use Bankrate.com’s Auto Loan Calculator.
Tara Baukus Mello writes the cars blog as well as the weekly Driving for Dollars column, providing both practical financial advice for consumers as well as insight into the latest developments in the automotive world. Follow her on Facebook here or on Twitter @SheDrives.