US Consumers Owe $1.17 Trillion in Car Loans

By Paul Ausick Updated Jan 11, 2:00PM EST · Published Dec 7, 1:20PM EST

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US Consumers Owe $1.17 Trillion in Car Loans — © travelif / Getty Images

Whether U.S. consumers are purchasing a new car or a used model, chances are that an auto loan is involved. More than 85% of all new car buyers and nearly 53% of used car buyers financed vehicle purchases in the third quarter of 2018.

The average loan amount to purchase a new vehicle reached $30,977, up $647 (about 2.1%) compared to the same period last year. Loans to purchase a used car averaged $19,861, up $570 (about 3.1%) year over year. Third-quarter new and used car average prices and other data were reported Thursday by Experian Automotive. The average used car price reached a record high in the quarter.

The better a car buyer’s credit rating, the lower the available interest rate on a car loan. No surprise there, but the gap between the top and the bottom is vast. A super-prime buyer (credit score of 781 or higher) paid an average of 3.68% interest on a new car purchase in the third quarter. A deep-subprime buyer (credit score of 300 to 500) paid an average interest rate of 14.41% on a new car.

The gap on used cars, especially at independent dealers that often finance their own sales, was even wider. A super-prime borrower paid an average interest rate of 4.37% to buy a used car from an independent dealer, while a deep-subprime buyer paid an average interest rate of 19.72%.

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The total U.S. open car loan balance for the first quarter of 2018 was $1.17 trillion, up from $1.12 trillion in the third quarter of 2017 (4.7%) and from $1.06 trillion in the third quarter of 2016 (10.4%).

Banks hold 31.0% of the outstanding balance, while dealer captive finance holds 30.1%, credit unions hold 22.6% and finance companies hold 10.5%.

Other data points culled from the study:

The average credit score for a new vehicle loan was up a point at 717 year over year.
The average credit score for a used vehicle loan increased two points to 661.
In the second quarter, the average monthly payment for a new vehicle hit $530, a year-over-year increase of $28 and a new all-time high.
The average interest rate for new vehicle loans to all borrowers rose to 5.73%, up 63 basis points year over year.
Loan terms for new vehicles were down by 0.53 months at 68.47 months compared with the third quarter of last year; terms for used vehicle loans rose to 64.36 months, up by 0.41.
Leases accounted for 33.93% of all new car transactions, down about 0.1 percentage points compared with the third quarter of 2017.
Lease terms rose slightly to average 36.18 months in the third quarter.

The full report is available from the Experian website with free registration.

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About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.