How much money are you paying for that new car you enjoy driving so much? The truth told, Americans have been paying more for cars in recent years than ever before. But how much is the average American auto payment?
According to statistics that were released by Experian Automotive, the average American auto payment is $493 per month on a new vehicle loan. Lessees get a bit of a break, but are still paying through the nose, with the average lease payment being $412 per month, helping to fuel a 33.6% increase of new vehicles being sold due to the more lucrative payment.
The reason why auto payments have skyrocketed in recent years is due to the fact that Americans are buying more expensive automobiles. The report explained that the average amount financed on an auto loan was $29,551 for 2015, an increase of $1,170 from 2015. What’s more, long term deals consisting of 73 months or longer have increased by 29% for new vehicles.
The longer term financing option used to be frowned on by lenders and was not nearly as popular 10 years ago as it is now. One reason is because with so many years to pay off a car, there’s always the risk of it being upside down years into the note while the lender is still covering a heavy balance.
A scary notion is this: delinquent loans are soaring, and are nearly as high as they were in 2010, during the immediate aftermath of the Great Recession. With lenders taking more risks and relaxing more on auto loans, it seems that an auto bubble may be in the works that could end up resulting in the default of billions of dollars in loans that could go bad.
But from the lending side, the creditworthiness of most borrowers is not in question. That’s because the average credit score of a borrower was 711. Back in 2009, this average score was not much higher at 729.
With monthly payments this high, some people may find it hard to stick to the terms of their loan during a financially demanding month. The best advice is to really do your research on a vehicle, the maintenance costs and depreciation before you make a buying decision.
Also, consider getting financed privately as opposed to at the dealership, where they earn points on every loan they finance. Lastly, a certified preowned vehicle is never a bad choice and can help you get your monthly payment down to something more reasonable.