{"id":94780,"date":"2015-06-01T10:13:00","date_gmt":"2015-06-01T14:13:00","guid":{"rendered":"http:\/\/www.thedetroitbureau.com\/?p=94780"},"modified":"2015-06-01T11:24:54","modified_gmt":"2015-06-01T15:24:54","slug":"new-car-loans-getting-longer-larger","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2015\/06\/new-car-loans-getting-longer-larger\/","title":{"rendered":"New Car Loans Getting Longer, Larger"},"content":{"rendered":"
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New car loans are longer and for more money than ever, according to Experian Automotive.<\/figcaption><\/figure>\n

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.<\/p>\n

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.<\/p>\n

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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\u2019t uncommon, but changing the parameters of loans would be of concern.<\/p>\n

\u201cWhile longer term loans are growing, they do not necessarily represent an ominous sign for the market,\u201d said Melinda Zabritski, Experian\u2019s senior director of automotive finance. \u201cMost longer- term loans help consumers keep monthly payments manageable, while allowing them to purchase the vehicles they need without having to break the bank.<\/p>\n

\u201cHowever, it is critical for consumers to understand that if they take a long-term loan, they need to keep the car longer or could face negative equity should they choose to trade it in after only a few years.\u201d<\/p>\n

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The longer term is coming because of the growth in popularity of terms exceeding 72 months. The percentage of loans with terms of between 73 and 84 months reached a new high of 29.5% in the first quarter of 2015, up from 24.9% a year earlier.<\/p>\n

Long-term used-vehicle loans also broke records, with loan terms of 73 to 84 months reaching 16% in the first quarter 2015, up from 12.94% \u2014 also the highest on record.<\/p>\n

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As expected, the longer terms are coming with larger average amounts financed as well as higher payments. The average new vehicle loan was $28,711 in Q1 2015, compared to $27,612 in Q1 2014. The average monthly payment went from $474 in Q1 2014 to $488 in Q1 2015.<\/p>\n

In other findings:<\/p>\n