Average duration of auto loans exceeds 70 months for the first time

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Even though sales have fallen dramatically, automakers have moved cars again last month.

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U.S. car buyers helped the industry take a significant, albeit troubling, milestone last month.

In March 2020, the average duration of a car loan exceeded 70 months, according to new data released Wednesday by Edmunds. Car buyers are on track to take the leap since the emergence of 72-month and even 84-month financing for new vehicles in recent years. Data shows that in March 2015 the average loan term was already 67 months, and last year it increased to 69 months.

The longer durations correlate directly with the prices of new cars; the average cost of a new car has increased dramatically in recent years, especially as automakers offer more cost-effective SUVs and trucks. As of March 2020, the average amount funded was $ 34,052 after an average down payment of $ 4,008. Five years ago, the average amount funded was less than $ 30,000. That leaves the average payment for a new car at $ 573 per month, up $ 20 from last year. The average car buyer paid around $ 38,000 for a new car.

It should be noted that the APRs fell slightly compared to March 2019. Data shows 5.8% was the average rate last month, compared to 6.4% at the same time last year. More buyers have also taken advantage of 0% financing as more automakers are pulling all the tools out of their trunks to boost sales amid the coronavirus outbreak. Almost 5% of car buyers received a 0% finance deal last month.

On the other end of the spectrum, the number of car buyers who bought a vehicle with an APR of 10% or more also jumped in March. In total, 13% of car buyers received an APR of at least 10%, up from 11% in February. Edmunds suggested that most of the cars bought in March were likely needs-based, especially towards the end of the month.


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