Consumers Borrowing More to Cover Car Costs

While car sales continue their upward trend, consumers are apparently going deeper into debt than ever to pay for them. According to Experian Automotive in Schaumburg, Ill., the average new-vehicle loan was a record $27,799 during the third quarter of 2014, which represents an increase of $1,080 over the previous year. Used vehicle loans jumped by an average $676, reaching $18,576 during the same period. What’s more, consumers are financing their rides for longer periods, with new-car loans in the 73- to 84-month range growing by 23.7 percent. Meanwhile, leasing a car or truck for a set period accounted for 29.1 percent of all non-cash transactions in the third quarter last year, which represents a 7.1 percent increase over the same period in 2013. “Car buyers tend to shop with a monthly payment in mind. As a result, we are continuing to see them turn to leasing and longer loan lengths as strategies to keep payments down and make vehicles more affordable,” says Melinda Zabritski, senior director of automotive finance for Experian.