Lower interest rates and longer terms kept monthly auto loan payments nearly flat despite bigger loans in the third quarter, according to Experian Automotive.
Experian said in a written report today that the average interest rate for new-vehicle loans originated in the third quarter was 4.27 percent. That was down from 4.53 percent a year earlier and the lowest average rate since Experian started reporting the data in 2008.
At the same time, the average amount financed in the third quarter was the highest since 2008, at $26,719 for new-vehicle loans. That was an increase of $756 or 3 percent from the year-earlier period. The average monthly loan payment increased only 1 percent vs. a year ago, to $458.
The average term on new-vehicle loans was 65 months, up one month from a year earlier, Experian Automotive said.
Consumer confidence rises
Pete Turek, vice president of automotive for credit bureau TransUnion, says higher loan amounts reflect improved consumer confidence.
"As consumers take on more debt, that's sort of a surrogate for consumer confidence," he said in a phone interview.
TransUnion, which measures the average amount of automotive debt per borrower, said debt increased for the 10th consecutive quarter, to $16,685 in the third quarter from $15,943 a year earlier. Those figures are for all outstanding loans and leases, whenever they were originated, divided by the number of accounts.
Meanwhile, Experian Automotive also said lease penetration increased in the third quarter to 27.2 percent of new-vehicle financing from 24.4 percent a year earlier.
The average monthly lease payment dropped slightly to $404 in the third quarter from $409 a year earlier.
"The third quarter of 2013 proved to be a good time to purchase a new vehicle, particularly for consumers who buy based on their monthly payments," said Melinda Zabritski, Experian Automotive's senior director of automotive credit.