Affordability remains a concern despite finance sources continuing to tighten underwriting standards, according to the firm. Consumers, however, seem unfazed, with outstanding balances climbing to a new record high.
The dream of owning a new vehicle is becoming more elusive for the average American consumer, with the average amount financed and monthly payment for a new vehicle climbing to record highs of $31,455 and $523, respectively.
Replacement demand from hurricanes Harvey and Irma should provide a temporary boost in new-vehicle demand to open 2018, but TransUnion officials said consumers will shift toward the used-vehicle market as finance sources continue to tighten credit underwriting standards.
The auto finance market is a trillion-dollar industry. It’s also very much a prime market, with subprime financing remaining at near-record lows in the second quarter.
Finance sources responded to the recent uptick in delinquencies by moving upstream in the first quarter, pushing subprime lending to a 10-year low.
At a record 69.3 months, average new-vehicle finance terms have stretched 6.8% from five years ago. The average amount financed and average monthly payment also registered new highs.
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