MENU
SEARCHNew-vehicle loans out of reach for many as others take on marathon terms that could put them under water.
New loans with monthly payments of at least $1,000 made up 17% of new-vehicle loans in a six-quarter trend.
Pexels/Erick Marynowski
New-vehicle auto finance conditions continued to dog consumers in the third quarter with daunting affordability conditions.
High vehicle prices and interest rates kept coupling to push many consumers into overly long loan terms, according to Edmunds, which said 69% of new-vehicle loans had 60-month-plus terms in the quarter, continuing this year’s trend. In fact, it said, 84-month terms are steadily increasing, up from 17% in the second quarter to 18%.
"Longer loan terms might make monthly payments more palatable for consumers, but the harsh reality is that most Americans don't want to keep their vehicle for seven years," said Edmunds Director of Insights Ivan Drury. "Simply put, longer loan terms put car owners at greater risk of rolling negative equity into their next auto loan."
New loans with monthly payments of at least $1,000 made up 17% of new-vehicle loans in a six-quarter trend, Edmunds said.
In an August Edmunds survey, 62% of respondents said they’ve delayed buying a new car due to high interest rates. Though the Federal Reserve made a big cut to rates in September, the effect will take time to trickle down to auto loans. The average annual percentage rate was flat in the third quarter at 7%, Edmunds said.
DIG DEEPER: Is the Death Knell Being Sounded for Dealer Financing?
Originally posted on Auto Dealer Today
A recent price spike due to several larger market forces, though it hasn’t dulled demand, is pushing more consumers to efficient models to squeeze in buys.
Read More →
A group out West picked up the major D.C.-area collection, putting it in the upper tiers of private automotive groups in the U.S.
Read More →
Cox Automotive research shows both the opportunities and the challenges in turning consumers’ growing affordability needs into increased fixed-operations revenue.
Read More →
The partner you choose for growth and expansion is key, because better is the ultimate goal instead of growth for growth’s sake.
Read More →
The dealership profit center plays an important role in customer retention, and generation Z customers are showing the highest loyalty rates, based on recent CDK Global data.
Read More →
The Point Predictive study traced a pattern across more than 100 websites it believes are being developed by an international theft ring.
Read More →
The sale of two Minnesota franchises ends a rare multigenerational business while adding to one of the Midwest’s biggest auto groups.
Read More →
California, as usual, led the country in EV registrations in the fourth quarter, but the U.S. as a whole saw a 43% year-over-year volume decrease.
Read More →
Forecasts show that the spring sales season is rising above overriding economic concerns, among them continuously rising car prices, trade tariffs, elevated interest rates, and now a war.
Read More →
The Kerrigan Index shows that despite a chaotic year of musical trade tariffs, high vehicle prices and more roadblocks, acquirers still flush with pandemic-era cash accelerated the consolidation pace.
Read More →
