Who doesn’t like low monthly payments? Unless you are lucky enough to buy a car outright, most consumers would agree that when making any large purchase, one of the goals is to keep the monthly payments as low and affordable as possible. Whether it is providing a large down payment, extending loan terms or securing the lowest interest rates, keeping costs down is a number one priority (at least in my household).
As it turns out, Experian Automotive’s recently released State of Automotive Finance report showed that very thing. The report found that the average loan terms for a new vehicle jumped to an all-time high of 65 months, the average interest rate for new and used vehicle loans dropped and the average monthly payments dropped versus the same time period in Q4 2011.
The report also showed that the average loan amount for a new vehicle was $26,691 in Q4 2012, up $272 from Q4 2011, while the average used vehicle loan was $17,629 in Q4 2012, up $239 from Q4 2011.
However, while consumers are taking out larger loans, lower interest rates and longer loan terms for new vehicles helped bring down the average monthly payments. For example, the average interest rate for a new vehicle loan in Q4 2012 dropped to 4.36 percent, from 4.52 percent in Q4 2011, while the average interest rate for a used vehicle loan dropped to 8.48 percent, from 8.67 percent in Q4 2011. Additionally, the average monthly payment for a new vehicle dropped from $468 in Q4 2011 to $460 in Q4 2012.
More consumers also were able to obtain financing in Q4, as average credit scores for both new and used vehicles dropped. For new vehicle loans, the average consumer credit score was 755 in Q4 2012, down six points from Q4 2011. For used vehicle loans, the average consumer credit score dropped to 665 in Q4 2012, down five points from Q4 2011