High-Tech Features Push U.S. Vehicle Loans to Record Levels
(Bloomberg) -- The average loan amount for new and used vehicles in the U.S. set records in the third quarter, as more sophisticated features like self-driving technology pushed up car prices.
The average amount of a new-vehicle loan rose by 5% to $32,480 from a year earlier, according to information services firm Experian PLC. The average used-vehicle loan increased by 3% to $20,466.
Car buyers are paying up for high-tech features such as voice-activated entertainment systems and semi-autonomous driver-assist technology that steers wandering cars back into their lane and automatically brakes to avoid read-end collisions.
“Not only are consumers preferring SUVs which are typically more expensive than their sedan counterparts, but they’re also choosing not to skimp on in-vehicle features and content -- a positive indicator of consumer confidence in the economy,” said Oliver Strauss, chief economist at ALG, a subsidiary of TrueCar.
U.S. auto debt has continued to expand, ticking up to $1.32 trillion in the third quarter -- an increase of $50 billion from a year earlier, according to the latest data from the New York Fed. The percentage of car loans in serious delinquency -- with owners behind on payments by 90 days or more -- also rose to 4.71% from 4.27% the previous year.
The average payment on a new car or truck remained near a record $550 per month in the third quarter, according to Experian. To put this number into perspective: A homeowner could service about a $115,000 mortgage with a 30-year term at current interest rates for the same monthly payment.
Consumers are also lengthening the terms of loans, with maturities of six years the most common. The average duration of a loan for a used car was 64.89 months and for new vehicles 69.28 months, according to Experian. The average lease term increased to 36.54 months from 36.18 months a year earlier.
Buyers with good credit, prime and super prime consumers, now make up 51.24% of used car financing -- the highest percentage in a decade. The average monthly payment for a used vehicle reached $393 last quarter and the average payment for a leased vehicle rose $22 from a year earlier to $452 per month, Experian said.
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