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Car Buyers Borrowing More Than Ever

Car finance: older car financingThe average new car buyer financed $40,290 in the second quarter of 2022, according to credit monitoring company Experian. That’s an increase of 13.2% over last year’s figure.

The price of the average new car has soared over the past year — $48,182 last month, compared to $42,736 in July 2021. But incomes haven’t kept pace with that increase, which has left Americans working longer than ever to pay off their new cars. As of July, the average earner would need to work 42.2 weeks to pay off the average new car.

Used car buyers are borrowing more, too. Experian reports that the average used vehicle loan last quarter was $28,534 — nearly 19% higher than one year ago. The average used car price increased in July after several months of decreasing.

Year-over-year, the buyers with the worst credit scores suffered the biggest increase in their monthly expenses. Experian reports that subprime borrowers are paying $97 per month more than they were a year ago, while prime buyers average $83 more.

Loan terms stayed steady, Experian reports. The average borrower committed to 69 months of payments.

Also, for the first time SUVs surpassed 60% of the auto loan market. Just 18% of buyers borrowed to finance a sedan.

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