Wednesday, February 1, 2023
News The average car loan is almost 6 years in the US

The average car loan is almost 6 years in the US

This could blow up in everybody’s face. While we don’t have relevant Canadian numbers, we’re well aware that the situation is just about as dire here. The US’ economy is currently in the midst of a solid recovery following Obama’s second term: Unemployment is low, money’s flowing somewhat and up until very recently, interest rates were ridiculous.

This has led to consumers leasing or financing far more car than they, in reality, can and should. The average length of an auto loan in now 69.2 months with average monthly payments in the $523 range. The fatal attraction of low rates has created this monster and despite the decent economy, loan delinquencies are on the rise.

What many consumers don’t get is that long loans typically translate into negative equity, in other words, you end up owing more for the car than it’s actually worth. If you default, credit is severely damaged as well.

There’s no end in sight to consumers shopping for a monthly payment. The only element that could slow this trend down is a further hike in interest rates, and shorter terms.

 

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Matt St-Pierre
Trained as an Automotive Technician, Matt has two decades of automotive journalism under his belt. He’s done TV, radio, print and this thing called the internet. He’s an avid collector of many 4-wheeled things, all of them under 1,500 kg, holds a recently expired racing license and is a father of two. Life is beautiful. Send Matt an emai

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