Consumers in the United States are going deeper into debt in response to rising prices for new cars and trucks, with the average new vehicle loan reaching a record-high $40,290 in the second quarter, according to credit monitoring firm Experian.
According to Experian’s latest report on the automotive finance market, the average monthly payment for a new vehicle loan increased to $667 in the second quarter, up nearly 15% from the previous year. According to Experian, the average amount borrowed increased 13.2%.
The average length of a new vehicle loan remained unchanged in the second quarter compared to a year ago, at just over 69 months.
Buyers of used cars are also borrowing more. The average used vehicle loan increased by 18.7% to $28,534, with a $515 monthly payment, an increase of 17%.
Despite the Federal Reserve’s efforts to cool the economy by raising interest rates, new vehicle prices in the United States have been rising at a faster rate than overall inflation for much of the year. Automobile manufacturers say they are still unable to keep up with demand due to semiconductor shortages and other supply chain snarls.
According to market research firm J.D. Power, the average new car or truck cost a record $46,259 in August.
According to Experian loan data, as new vehicle prices rise, more consumers are opting for a used car or truck. During the second quarter, used vehicles accounted for 61.8% of all vehicle loans, up from 58.5% the previous year.
According to Experian, 60% of vehicles financed in the second quarter were sport utility vehicles.
