First-Quarter Sees Long Auto Loan Growth
Experian data show more consumers are tapping the method, along with refinancings, to afford buying. Meanwhile, subprime borrowers are getting more access.
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The number of automotive consumers taking out extra-long loan terms continued to grow in the first quarter for both new and used vehicles, though some shaved their loan payments with refinancings.
The quarterly report by consumer credit reporting agency and data provider Experian shows new-vehicle loan terms exceeding six years grew from 31% to about 36% year-over-year while those longer than seven years inched up to more than 3%.
Used-vehicle lending also saw long loan term growth in the quarter, those longer than six years up from about 29% to about 32% and loans longer than seven years up slightly to 1.4%.
The average new-auto loan total rose 5% to $43,925, Experian reported, and the average monthly payment jumped about 3% to $770.
Meanwhile, the average used-vehicle loan amount increased about 3% to $27,070, and the average used monthly payment was up 1½% to $531.
Experian noted that despite high vehicle and gasoline prices, many consumers still gravitated to larger and therefore more expensive models, bridging the affordability gap with the long loan terms.
Some automotive consumers also saved by refinancing, cutting2.2% on average from their loan interest rates, according to Experian, which shrunk the average interest rate from 10.29% to 8.05% and reduced the average monthly payment by $81.
Subprime borrowers took a greater share of auto financing in the quarter, Experian said, up from 14% to about 16% and making up about 7% of new-vehicle financing and about 21% of used-vehicle loans.
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