Question of the Day: _________ of all new car loans are __ months or longer!
Consumers will do almost anything to meet a monthly budget. Are these loans going too far?
Answer: 1/5th of all new car loans are 84 months or longer!
- What factors impact the overall cost of a car loan?
- Why might more people agree to longer loan terms?
- How would you decide how much you are willing to pay per month and how long a loan term you can commit to?
Behind the numbers (Jalopnik):
"More people are taking on 84-month auto loans when it comes time to finance new and used cars. By the end of 2022, consumer credit agency Experian found that 84-month loans were underwriting nearly one-fifth of all new-vehicle purchases and 11 percent of used-vehicle purchases, according to Automotive News.
The loan data shows that the popularity of these longer loans — which commit buyers to a loan that lasts seven years — has surged since 2018: at that time, only 10.5 percent of new car loans and 4.1 percent of used car loans had such terms. By the third quarter of 2022, the numbers nearly doubled to 19.1 percent for new car loans, and more than doubled to 10.8 percent for used car loans.”
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