The typical loan payment for new car nowadays has hit a record $523 per month. It is no wonder buyers are taking out longer loans, some even approaching the 96-month mark.
Do you remember a time when new car and truck buyers were working out ways to keep their monthly payments under $500? Well, those days are behind us and a new study finds that the typical loan payment is higher than that today.
Experian has conducted analyses and reported that the first quarter of 2018 saw a $15 increase in the average monthly loan payment of new cars – compared to a year ago. Well, the new record-setting monthly car note is at $523. That is surely not a milestone to celebrate, but the harsh reality that is upon us.
Nearly 5 million auto loans were analyzed by Experian to calculate these payment and loan amounts.
The increase in monthly payments is not shocking if you look at the rise in interest rates. For the first quarter of this year, the average interest rate for a new car loan was 5.17%.
The combination of consumers buying more expensive cars and the higher interest rates mean it is taking people much longer to repay their debts. Experian says that the average length of time for an auto loan to be paid off in the first part of 2018 was more than 5 years and 9 months.
The data shows that Americans are willing to borrow more. With that being said, the study also demonstrates a decline in the amount of loans being held by customers not making their payments.
For January, February and March of 2018, new vehicles sales surpassed 17 million, according to Autodata, a automotive research group.
CNBC reports that,
“In the first three months of this year, the pace of new vehicles sales topped 17 million vehicles, according to automotive research firm Autodata. That rate is down slightly compared with recent years but is still very strong compared with the auto industry’s historical averages for annual auto sales.”
What do you think about this new record high? Is it compatible with what you are paying for your vehicle? Let us know your side of the discussion in the comments below.