Consumers keep up with rising loan payments
Delinquencies remain low as average loan amount increases.
The average new vehicle loan amount increased 8.5% in a year, according to Experian. The company’s latest State of the Automotive Finance Market report found that the average new vehicle loan amount increased from $34,682 in the third quarter of 2020 to $37,280 in the third quarter of 2021.
The average used vehicle loan amount increased even more, from $21,622 to $25,909 in the same time frame.
Larger loan amounts require consumers to make higher monthly payments. Average monthly payments for new vehicles increased from $565 in the third quarter of 2020 to $609 in the third quarter of 2021, and average monthly payments for used vehicle loans increased from $401 to $465 during this time.
Experian reports that inventory shortages are driving up vehicle prices. However, while prices have risen, customers are keeping up with their payments.
Third-quarter data shows that 30-day delinquencies grew from 1.65% to 1.66% between 2020 and 2021, while 60-day delinquencies stayed at 0.55%.
The report also notes that the delinquency numbers are lower than in the third quarter of 2019, when the rates were 2.35% and 0.79% for 30- and 60-day delinquencies, respectively.
Interest rates have decreased, with the average interest rate for a new vehicle loan decreasing from 4.23% in the third quarter of 2020 to 4.05% in the third quarter of 2021. For used vehicles, the average interest rate decreased from 8.39% to 7.98%.
Experian also found that overall loan balances grew 8% from the third quarter of 2020 ($1.2 trillion) to the third quarter of 2021 ($1.293 trillion), and that the average credit score for a used vehicle loan increased from 666 to 675 during that time.