Car Loans In The United States Are Growing Longer and Bigger

Chevrolet dealership (Credit: Chevrolet )

It’s no secret that the overall price of cars in the United States is rising. This fact has become apparent to just about any person who has decided to start browsing through vehicle options, only to suffer sticker shock.

New data recently released by Experian Automotive shows that the average amount financed by consumers in the first quarter of 2015 was $28,711. That figure accounts for both new and used vehicle sales. In the first quarter of 2014, the average financed amount was $27,612. Along with the bigger overall purchase price has come bigger monthly payments. The average American committed to payments of $488 a month.

Leasing is also hot right now, with Experian Automotive reporting that about 31.4 percent of all new vehicle purchases were leases. Despite the increase, average monthly payments fell to $405.

One of the most interesting pieces of information from Experian’s report has to do with the length of auto loans. The average term in the first quarter of 2015 hit 67 months for new vehicles and 62 months for used models. Both numbers are the highest ever, showing that car shoppers are committing themselves to staying under the burden of debt for longer periods.

With those averages, there are some car shoppers who are taking on incredibly lengthy commitments. Experian says that loans ranging from 73 to 84 months made up 29.5 percent of financed new vehicle purchases.

While some might think that consumers getting under longer loans is a bad thing, Experian Automotive disagrees. It argues that the longer terms actually makes it easier for people to make the monthly payment and deal with the rising cost of purchasing a car. It seems that for now, the practice of taking on loans that last up to seven years isn’t going away anytime soon.