Car buyers borrowing record amount – CNBC.com
According to Experian, the average auto loan in fourth quarter 2013 was $27,430—an increase of $739 compared with the same period of 2012. The average used car loan was $345 higher, coming in at $17,974.
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Those with non-prime credit ratings—or credit scores between 620 and 679—had the highest average auto loan. For these borrowers, the average new car loan rose more than $1,500, to a new high of $29,385.
And as their loans rise, keeping the monthly payment as low as possible has become more of a challenge—even as car buyers stretch their loans over longer periods of time. According to Experian, the average monthly payment for a new car auto loan rose $11 to $471 in the fourth quarter; the average monthly payment for a used car loan edged $4 higher, to $352.
Not surprisingly, those with subprime credit ratings—credit scores between 550 and 619—had the highest average monthly payment, of $499.
“I expect that monthly payment to continue rising and go above $500,” Zabritski said. “There’s always a tipping point where buyers say, ‘I can’t pay that much every month.’ So far, we haven’t seen the flashing lights go off indicating buyers are at a tipping point.”
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The payments are rising despite an increasing number of car buyers opting to stretch their loans over six or seven years. According to Experian, a record 20 percent of all new car auto loans in the fourth quarter were more than six years in length.