Will it take you a while to pay off your car? You are not alone.
Forbes reports that the average auto loan term reached a record length earlier this year. 69 months or almost six years is now the norm for the amount of time it takes to finish paying for your vehicle.
Many people are settling with paying more interest over time to get a lower monthly payment.
From Forbes.com:
The average new-vehicle loan term was a record in the second quarter of 2019, said Melinda Zabritski, Experian’s senior director of automotive financial solutions. “It’s a little over 69 months,” as of the second quarter of 2019, she said in a phone interview.
While that’s a record, it’s an increase of only about 0.4 months vs. a year ago, Experian said. The average loan term has been on the rise for years. In response to higher and higher prices, many borrowers have opted to pay more interest over the life of the loan, in return for more manageable monthly payments.
“Manageable” is a relative term. The size of the average loan and the average monthly payment have also been at or near record levels for a couple of years. The widespread switch to trucks, which tend to be bigger and more expensive than cars, has contributed to the rise in average pricing.
In the second quarter, the average new-vehicle loan was $32,119, up $1,161 from a year ago, Experian said. The average used-vehicle loan was a record $21,922, up $404. Data from the second quarter is the most recent publicly available from Experian Automotive.
Susan Saunders 9/5/19
