It’s becoming a worrying trend that in the U.S., people are borrowing more and paying more each month for their auto loans.
Analysts recorded that the average amount borrowed to buy a new vehicle hit an unforeseen $32,187 in the first quarter of 2019, and the average used-vehicle loan also hit a record $20,137. This means there has been no slowdown for loan demand.
As new car prices have been steadily rising, dealers and auto executives are closely watching if the upward trend of new car sales will sustain. So far, the average amount borrowed for new vehicles have topped $32,000 for the first time ever. Consequently, the average monthly payment for a new vehicle steadily rose to a new high of $554 and to $391 for used vehicles.
However, people with even the best credit scores are opting for used vehicles. In the first quarter, 61.8% with prime credit rating and 44.7% with super prime rating loaned to buy used vehicles instead of new. This is a record for used vehicle borrowing.
Analysts believe that it is because consumers are exploring options to reduce payments, especially leasing, and hence the preference for used vehicles.