The average amount financed and average monthly payment for new vehicles in the fourth quarter rose to their highest level since Experian Automotive began tracking the data in 2008, the company said today.
To stay within their budgets, consumers are relying on leases and used-vehicle purchases, Experian said.
The average amount financed on a new vehicle was $29,551 in the fourth quarter, a 4 percent, or $1,170, increase year over year. The average monthly payment on a new vehicle was $493, a 2.3 percent, or $11, rise vs. the fourth quarter of 2014, according to part two of Experian’s State of the Automotive Finance Market report. The previous high for new-vehicle monthly payment was in the first quarter of 2015 at $488.
Consumers often purchase vehicles based on a low monthly payment, Melinda Zabritski, senior director of automotive credit, said in a statement. “And right now, average dollar amounts for new-vehicle loans are soaring.”
To avoid expensive monthly payments, consumers, in various credit tiers, are “turning to leasing and used vehicles as cost-effective alternatives to buying new,” Zabritski said.
High leasing, used purchases
The difference in monthly payments between new and used vehicles was $134, the highest on record, Experian said.
Used-vehicle loans accounted for nearly two-thirds of all vehicle financing. The average amount financed on a used vehicle was $18,850, a 2.4 percent rise vs. the fourth quarter of 2014. The average monthly payment was $359, up $4 year over year.
Lease penetration reached a record 33.6 percent of all new-vehicle financing in the fourth quarter, Experian said. The average lease payment was $412, a $4 increase from a year earlier but still $81 less than the average payment on a new-vehicle loan.
Loan terms stretch
The average loan terms for new and used vehicles stretched by one month each, to 67 months for new vehicles and 63 months for used, compared with the fourth quarter of 2014.
The average new-vehicle loan term held steady at 67 months through 2015. In 2014, it held at 65 months. “It usually takes about a year to uptick,” Zabritski told Automotive News.
On the used-vehicle side, the average loan term held at 63 months in the third and fourth quarters of 2015. The average was 62 months from the third quarter of 2014 to the second quarter of 2015.
Loan terms of 73 to 84 months grew 12 percent for new vehicles, making up 29 percent of new-vehicle loans, and 10.8 percent for used vehicles, making up 16.4 percent of used-vehicle loans.