US consumers are borrowing at record highs as car prices rise

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The average monthly payment for a new auto loan rose to $667 in the second quarter, up nearly 15% from a year earlier, Experian said in its latest auto finance market report. The average amount borrowed increased by 13.2%, Experian said.

The average new vehicle loan term remained stable in the second quarter compared to a year ago, at just over 69 months.

Used car buyers are also borrowing more. The average used vehicle loan jumped 18.7% to $28,534, with an average monthly payment of $515, up 17%.

Despite the Federal Reserve’s efforts to cool the economy by raising interest rates, prices for new vehicles in the United States rose faster than the headline inflation rate for much of the year. Automakers say they still can’t keep pace with demand due to semiconductor shortages and other supply chain issues.

The average price of a new car or truck hit a record high of $46,259 in August, market research firm JD Power said this week.

Experian said loan data shows more consumers are opting for a used car or truck as new vehicle prices rise. Used vehicles accounted for 61.8% of all auto loans in the second quarter, up from 58.5% a year earlier.

Of the vehicles financed in the second quarter, 60% were sport utility vehicles, Experian said.

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