First Quarter Car Loan Analysis: Consumers Hit Record High Stretching Out New-Car Loans And Snatching-Up Low Lease Payments

As car sales continue to rise from the doldrums we experienced during the Recession, consumers eagerness to drive the latest rides and to roll away with manageable car payments are causing lenders to stretch out their monthly payments. Since Experian Automotive first started capturing loan data in 2006, this is the first time auto loans have reached 66 months (or 5 years and 6 months). And new-vehicle loans that span from 6 years to 7 years accounted for 25 percent of total loans consumers drove off in during the first quarter, increasing by 27 percent from the same period in 2013.



Consumers are taking on more debt load. The average new-vehicle financed driven off of dealer lots was $27,612, up $964 from the the first quarter of 2013. This equated to the average payment from 2013 rising by $14 from $459 to $474 a month.

Automakers are attempting to combat these long-term loans by pushing leasing, which gives the consumers the ability to drive a more expensive vehicle at a lower monthly payment than even financing can offer. In fact, 30 percent of new-vehicles sold in the first quarter were leased, rising from 27.5 percent in the first quarter of 2013. One caveat of leasing is that consumers typically must have higher credit scores. The average credit score for folks who financed new-vehicles and for those who leased new vehicles were 714 and 721, respectively.