Car loan records are being set, as Americans seem to have few issues with being on the hook for automobile payments. According to TransUnion, car loan balances have now surpassed the $1 trillion mark – specifically, the number is $1.008 trillion as of the third quarter of this year. The car loan records are happening due to three factors.
Reasons for Car Loan Records
First, new-car sales are on a record pace and most new cars are financed; experts are predicting the total number of new vehicles sold in 2015 to come in at more than 18 million.
Second, as you might imagine, the prices of new cars are rising – and consumers are buying more expensive cars with gas prices falling. The demand for light trucks has gone up by 12 percent when compared to the first 10 months of 2014. Sales tracking company TrueCar estimates the average new-car price to be $32,529 – with the average car payment being just under $400 per month. All this means larger amounts are being financed.
Last but not least, interest rates are very low these days – especially for those with good credit scores. Those with the highest numbers can often find loans at rates below three percent.
According to the TransUnion report, the average balance for all vehicle loans through the third quarter of this year is $14,515. While this was a 2.7% rise from the same time frame 12 months earlier, this marks the slowest growth since the last quarter of 2011.
The good news is that consumers seem able to manage these payments. Of the $1.008 trillion in loans, only about $9 billion – or less than one percent of these loans – are delinquent. This is a much better rate than credit cards or home mortgages.
Other noteworthy revelations from the report show that the number of consumers under age 30 who had car loans increased by nearly 10 percent, while almost 16 million people age 60 and older had loans.
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