Drivers stretching the terms of their auto leases – CNBC
The growth in longer-term leases mirrors a trend banks, credit unions and auto finance firms have seen for several years. Consumers want longer terms on their loans so they can afford more expensive vehicles. That’s one reason why the average auto loan now calls for monthly payments over a span of five years and seven months.
Experian says auto loans extending from six to seven years now make up almost a third of all new vehicle financing, with those loans increasing almost 20 percent in the second quarter.
As a result, the average monthly payment for a new vehicle edged slightly higher to $483, from $467 one year ago.
Whether it’s buying or leasing a new or used vehicle, one trend is clear: More Americans are borrowing to pay for their vehicles. According to Experian, 85.8 percent of all new vehicles sold in the second quarter were financed, while 55.5 percent of used vehicle purchases were financed. Both represent record highs for the second quarter.
The report comes as the auto industry continues to run at a near record pace in the U.S., with August projected to hit an annual sales rate of 17.4 million, according to TrueCar.
America is on pace to have its second-best year ever for auto sales, based on the latest information from industry consulting firm Autodata.
Questions? Comments? BehindTheWheel@cnbc.com.