The time it takes for consumers with new-car loans to reach a positive equity position on their vehicles has grown by 12 to 14 months over the past 15 years, but that’s not necessarily a bad thing, says Steven Szakaly, chief economist for the National Automobile Dealers Association.
It now takes a consumer with a new-vehicle loan 36 to 38 months to reach positive equity. Back in 2000, it took around 22 months, he said.
What hasn’t changed is that it still takes consumers about half their loan period to get into that positive equity position, Szakaly said. The time it takes to reach positive equity today just looks different because the lifetime of the car has changed, he said.
The average new-vehicle loan term was 67 months in the first quarter this year, according to Experian Automotive.