According to Experian Automotive, outstanding auto loan balances in the United States soared to a record $987 billion in the fourth quarter of 2015, with average monthly payments rising to $493 from $482.
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In addition, our reliance on financing is growing–nearly 90% for all new vehicles and more than 54% for used cars sold in the fourth quarter were financed.
The Experian research found that 20% of all auto loans went to borrowers with sub-prime and deep sub-prime credit scores.
“While loan balances continue to rise and funding may be more easily attainable, it is critically important for consumers to stay on top of their monthly payments to keep the automotive market running on all cylinders,†she says.
Analysts at WalletHub.com recommend prospective car buyers get their free credit score and leverage a Car Payment Calculator to determine what they can afford and how long it would take to pay off their future auto loan.
As for whose doing the lending, Experian says balances at finance companies jumped 23% in the fourth quarter of 2016 from 2015, while lending by credit unions rose 16%. Banks, which still hold the largest share of auto loans saw balance growth of 7.6%.