Detroit Bureau on Twitter

Posts Tagged ‘used car loans’

Car Buyers Getting Longer Auto Loans

Terms continue get longer as buyers look for lower payment.

by on Mar.09, 2017

Car buyers are using longer-term loans with increasing frequency to lower their monthly payment.

Consumers continue to use longer-term loans to reduce the costs of monthly payments when they purchase a new vehicle with almost one third opting for loans of between six and seven years, according to new data from Experian, the credit monitoring service.

Experian, in its latest report on the State of Automotive Finance Market, also found the average loan amount for a new vehicle reached a record high of $30,621 in the fourth quarter 2016. The average loan amount for a used vehicle also reached record levels, jumping from $18,850 in fourth quarter 2015 to $19,329 in in the fourth quarter of 2016.

Drive On!

Total open automotive loan balances reached a record high $1.072 trillion in the fourth quarter of 2016, up from $987 billion the same period in 2015 but the growth in loan balances has slowed, the report said. (more…)

American Car Buyers Paying Record Prices, Going Deeper Into Debt

Leasing soars as motorists look to hold costs down, says new study.

by on Mar.03, 2016

American motorists are paying more for their vehicles and borrowing more.

Even as U.S. car sales surge to record levels, a new study shows that American motorists are spending more than ever for their vehicles – with loan levels also reaching new records.

Searching for a way to offset rising prices, a growing number of buyers are turning to leasing, according to Experian Automotive which issued its quarterly “State of Automotive Financing” report on Thursday.

Bank on Us!

“People shop for vehicles largely based on monthly price, and right now, average dollar amounts for new vehicle loans are soaring,” said Experian’s auto credit director Melinda Zabritski.


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.

Subscribe for Free!

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…)

Lenders Continue Easing Access to Auto Loans

Banks, finance companies taking on more risk.

by on Mar.09, 2015

Bank regulators and analysts are wondering if it's too easy to get a loan for a car.

The rising volume of new car loans is drawing the attention of bank regulators and analysts, who are watching for signals about what the increasing demand for loans says about the state of the economy and the car business.

Researchers from the Federal Reserve Bank of Cleveland noted that newly originated auto loans hit $105 billion in the third quarter of 2014, which is the highest level since 2005.

A Real Performer!

Federal Reserve Bank of Cleveland researchers Emre Ergungor and Caitlin Treanor claim the rapid growth in auto loans is due to an increase in the demand for cars and a continuing easing of standards in the supply of credit. (more…)

Automotive Loans at All-Time Highs

Rising new vehicle sales expected keep totals rising.

by on Feb.20, 2015

There are $866 billion outstanding vehicle loans in the U.S.: an all-time high.

Americans owe more money for new and used cars than ever: $866 billion, according to Experian Automotive.

That’s the outstanding loan balance for vehicles in the U.S. and not only have Americans borrowed more than ever for cars, the average length of new car loans is a record-high 67.2 months – almost six years.

It’s not entirely surprising as new cars are being sold for their highest prices ever, according to TrueCar.  The average transaction price for new cars in 2014 was $31,831. Next year it’s expected to surpass the $32,500.

Stay Informed!

Also it’s well-documented that lenders have loosened up their requirements, which certainly played a role in the record loan number, but only in the sense that sub-prime and deep sub-prime buyers were give more loans – like everyone else. (more…)

Expect to Pay More for Your Next Used Car

But trade-ins will be higher, as well.

by on Feb.07, 2012

Expect to pay more for that "previously-owned" car in the months ahead.

There’s good news and bad news for used car buyers.  On the down side, prices will likely be higher due to strong demand.  But that also should translate into better trade-in prices, as well, according to an automotive industry trade group.

The National Automobile Dealers Association is predicting that used car prices will rise again but at a slower pace than in 2011. Those higher used vehicle prices will be the result of Increasing demand and a drop in the supply of previously-owned cars and trucks, said Jonathan Banks, executive automotive analyst with the NADA Used Car Guide.

On the positive side, “Consumers shopping for either a new or used vehicle will benefit this year from higher trade-in values along with loosening credit,” Banks said.

All the News!

For dealers, reliance on customer trade-ins will increase as they strive to meet the challenges of growing demand in a supply-constrained market. Dealers are facing a particular struggle coming up with “nearly new” two to four-year-old vehicles due to the downturn in the new car market over the last four years.  In particular, there are significantly fewer vehicles coming off-lease as many lenders curtailed their leasing programs during the depths of the Great Recession.


Lack of Loans Pushing Buyers from New to Used

Delinquent loan rates continuing to creep upwards.

by on Jun.09, 2009

A new study finds a growing number of potential new car buyers can't find loans and are settling for used vehicles.

A growing number of potential new car buyers can't find loans and are settling for used vehicles.

The struggling economy, job losses and stricter lending criteria have pushed more consumers into loans for used vehicles, rather than new, according to a new report by Experian Automotive, which also found the number of delinquent loans continuing to creep upwards.

Experian’s quarterly analysis of the automotive credit market indicates that used vehicle loans accounted for 68.13% of all automotive loans in the first quarter of 2009, up from 64.3% of all automotive loans in the first quarter of 2008. Share of loans for new vehicles fell to 31.87% in the first quarter of 2009, compared with 35.7% in the first quarter of 2008, according to Experian.

“Banks, credit unions and captive finance companies appear to have tightened their lending criteria as they look to mitigate risk,” said Melinda Zabritski, director of automotive credit for Experian Automotive.

“Loans are still available, but lenders are changing terms. This is pushing some consumers out of the new vehicle market and into the used vehicle market. Some finance companies that specialize in subprime loans have seen their share increase as traditional lenders move away from riskier loans,” she said.

In addition, independent used vehicle dealers — those dealers not affiliated with a specific manufacturer — were the biggest winners in the first quarter, seeing their share of used vehicle loans rise from 31.58% in the first quarter of 2008 to 34.97% in the first quarter of 2009. Independent dealers typically serve customers with lower credit scores and are gaining share as traditional lenders tighten their loan criteria. (more…)