With the boom in auto sales, there has also been an expansion in auto loans. This means that more people are financing their cars than ever, and monthly payments have hit new highs as well. Let’s take a closer look at the numbers.
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$1 Trillion And Counting
According to Experian, the total amount of auto loans in the first quarter of 2016 was just over $1 trillion for the first time ever. This is a 10 percent increase compared to last year at this time. It appears that truck and SUV sales are driving a large portion of this activity, as those vehicles are more generally more expensive than other types of cars.
Average Loans At All Time High
Not only has the total loan amount broke records, but so have the average loan amounts. For example, the average new vehicle loan is currently $30,032. Meanwhile, used vehicle loans now average $20,723 from franchise dealers and $16,124 from independent dealers. All these numbers represent new all time highs.
Higher Monthly Payments
Not surprisingly, the average monthly car payment has broken past records as well. Now, borrowers are paying $503 on average for a new car. For used vehicles, average monthly loan payments are $376 at franchise dealers and $351 at independent dealers.
Interest Rate Data
The average auto loan interest rate for Q1 2016 was 4.79 percent on new vehicles. Used vehicle loans are 7.81 percent interest on average from franchise dealers and 12.22 percent on average from independent dealers.
Subprime Bumping Up
The number of subprime borrowers increased to 11 percent, a 5.5 percent increase from last year. However, the total percentage of subprime borrowers fell by 1.1 percent. Experian also reported a slightly higher percentage of delinquent loans which they say the market should keep an eye on. The good news is that, overall, delinquency remains at historic lows.
More Used Leases
Thanks to lenders such as Ally Financial, BMW Financial Services, and Toyota Financial services, there has been increased interest in used vehicle leasing. This renewed interest is partly due to the fact that these companies are offering certified pre-owned leasing packages. As new vehicle sticker prices continue to rise, consumers are considering all their options, such as used leasing. Used vehicles currently make up 4 percent of the lease market, up 2.1 percent from the same period last year.
Refinancing Always An Option
With any car or truck loan, refinancing may reduce your overall loan amount, monthly payments, or even both. It pays to shop around once a year or so to see if you can get a better loan rate. In some cases, you could save thousands of dollars over the life of the loan.
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Published in CARCHEX Auto Finance Resources by CARCHEX on June 25, 2016