Banking & Finance

As Auto Sales Rises, So Do Lengths of Loans

YOUNGSTOWN, Ohio – During the first quarter, more than one-fourth of those who bought new cars and light trucks financed them with loans 73 to 84 months in length – 6½ to seven years – Experian Automotive reports.

Experian and Equifax are two of the three major credit reporting agencies in the United States.

The average term of a new-car loan rose to 67 months for new vehicles, Experian Automotive said, and to 62 months for used cars and trucks, both records.

The length owners keep their cars is growing as well, NADA, the National Automobile Dealers Association, reports. The average age of a car or light truck on the road rose to 11½ years in 2014.

In 2005, the average life of a car before it was scrapped was 9½ years, a light truck about 10¼ years.

Auto-loan terms might be getting longer, Equifax said, but the delinquency rates of those who finance their cars and light trucks have fallen to their lowest point in a decade.

Equifax said the number of new subprime auto loans was 983,275 in January and February, an 8.1% increase over the first two months of 2014.

Regardless, those in arrears on their car payments 60 days or longer dropped to 0.81% in April the lowest level in 10 years, down from 1.15% in January and 1.12% in February.

Published by The Business Journal, Youngstown, Ohio.