Auto Consumers Stretched to the Limit?
Third-quarter stats find budget acrobatics, more accounts in arrears

Thirty-day delinquencies ticked up slightly in the third quarter to about 3%, and 60-day delinquencies rose to 1%.
Pexels/Mikhail Nilov
U.S. auto consumers are stretching their budgets to new extremes, and delinquent loans are on the rise, based on third-quarter data.
Though auto interest rates have fallen slightly, average loan amounts and monthly payments have still headed in the opposite direction, and more consumers are taking out extra-long loan terms to accommodate the inflation, Experian research found.
The patterns held for both new and used vehicles as many consumers who might have bought new in the past have turned to the used market for greater affordability.
The average interest rates for new and used autos barely ticked down in the quarter. The new-vehicle average fell by just about a tenth of a percentage point to 6.6%, while the average for used autos fell about half a percentage point to 11.4%, Experian reported.
Average loan amounts, meanwhile, shot up by 3% for both new and used autos, landing at $42,332 for new vehicles and $27,128 for used.
In response to the change, vehicle loan terms on the extreme end of the scale also rose, Experian found.
New-auto loans on 73- to 84-month terms rose three percentage points to about 30%, while those surpassing 85 months rose about half a percentage point to 2%.
On the used side, 73- to 84-month terms climbed a percentage point to 27%, and 85-month-plus loans ticked up slightly to 1%.
“Consumers tend to shop for vehicles based on monthly payment,” said Experian Head of Automotive Financial Insights Melinda Zabritski. “Although we’re beginning to see interest rates slowly decline, affordability remains top of mind for many shoppers.”
Some consumers can’t keep up, despite loan-stretching tactics. Thirty-day delinquencies ticked up slightly in the quarter to about 3%, and 60-day delinquencies rose to 1%, Experian said.
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New-vehicle financing increased in the quarter by a percentage point to 43%, while used-auto financing fell at the same rate to 57%.
Originally posted on Auto Dealer Today
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