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Posts Tagged ‘longer auto loans’

‘Under Water’ Trade Ins Hitting New High Water Levels

New car buyers taking bigger hits to get new vehicles.

by on Nov.28, 2016

New car buyers are trading in vehicles with more negative equity than ever — almost $5,000 on average.

A new statistic reveals that these days if Americans want a new car, truck or utility vehicle, they’ll do just about whatever it takes to get a deal done — including taking a huge hit on their trade in.

According to Edmunds.com, about 32% of all vehicles traded in on a new vehicle through September this year were “upside down.” That is to say, the owner owed more on the vehicle than it was worth, and the number is rising. It was 30% for the same period last year.

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That negative equity averaged $4,832. In short, add $5K to the price of that next vehicle being purchased. (more…)

Auto Loan Delinquencies on the Rise

Leasing, longer-term loans on the rise in U.S.

by on Feb.26, 2016

Fitch Ratings is warning that the subprime delinquency rate is on the rise.

Even with sales booming, the auto industry got another warning about easy credit as Fitch Ratings reported that delinquencies on U.S. subprime auto-related asset backed securities have reached a level not seen since the 2008-2009 recession.

The underperforming loans, which have been bundled into securities sold to investors, come from recent vintages driving the increase, according to Fitch. A recent report from Experian also noted rising level of delinquencies in car loans.

Picking up on the Trends!

Earlier this week, analysts from J.D. Power & Associates, while predicting strong sales for February, noted consumers are opting for leasing and long-term loans at record levels. So far in February, leases and loans of 72 months or longer combined to represent 65.1% of all retail sales, a record level for any month. The previous record was set in January 2016 at 64.3%, according to John Humphrey, J.D. Power & Associates top analysts. (more…)

New Car Loans Getting Longer, Larger

Updated on-call app ties into tech wearables.

by on Jun.01, 2015

New car loans are longer and for more money than ever, according to Experian Automotive.

New vehicle sales are humming along in 2015 led, in large measure, because of the appeal of full-size trucks, sport-utilities and luxury crossovers: all high-ticket purchases.

A bigger price tag often means a bigger loan. To keep the monthly payment down, borrowers are extending their loan terms to 67 months on average: the longest term ever for new cars, according to Experian Automotive.

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The trend extends to used cars as well, which saw the average loan length extended to 62 months. Stretching out the loan to get a lower monthly outlay isn’t uncommon, but changing the parameters of loans would be of concern. (more…)

March Car Sales Looking Strong

Buyers spending more – but taking longer to pay off loans.

by on Mar.22, 2013

U.S. car sales are maintaining a strong pace for March, according to several mid-month reports.

New car sales have remained steady in March and are expected to increase by 8 to 10%, year-over-year, according to new estimates from J.D. Power and Associates.

Using data from a broad network of dealers, Power estimates both retail light-vehicle sales and the total light-vehicle rate are consistent with February’s strong performance market.  That would work out to around 12.1 million vehicles by consumers and 15.3 million when fleet buyers are included in the mix.

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Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles. They also tend to be more profitable than fleet sales, especially those to daily rental companies. Most makers have been shifting focus to the retail side of the market – in part because that also tends to prop up residuals, or trade-in values.

(more…)