Payment Gap Between New and Used Hits All-Time High in Q2, Experian Reports
The rise in new-vehicle prices continued in the second quarter, with more consumers turning toward the used market and leasing. Loan terms also continued to stretch.
The rise in new-vehicle prices continued in the second quarter, with more consumers turning toward the used market and leasing. Loan terms also continued to stretch.
Shoppers were increasingly drawn to “near-new” used vehicles with higher price tags in the second quarter, with the average price of a used car increasing 8% from last year, according to Edmunds.
Delinquencies remained in check despite total outstanding auto loan balances rising to an all-time high, signaling a healthy automotive credit climate.
The Office of the Comptroller of the Currency said in its semiannual report that stretching terms and higher advances are a concern. The agency said it will continue to monitor the market and will take action when warranted.
The average loan term for new and used vehicles has increased by one month, reaching new all-time highs of 67 and 62 months, respectively, according to a new report from Experian.
Loan terms in the first quarter 2014 stretched to their highest level since the company began publicly reporting the data in 2006.
Terms are stretching, but the firm believes record lease penetration should maintain a healthy supply of future vehicle buyers with shorter purchase cycles.
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