In the United States, many people are now taking out large auto loans, with nearly 19% of new vehicle loans having monthly payments of over $1,000. This change has occurred recently, boosted by higher vehicle prices and a shift in production priorities among automakers.
Experian Automotive studied more than 5 million auto loans and leases in early 2023. Data shows that this percentage increased from about 17.4% last year. Melinda Zabritski, an expert in automotive finance, explained that people often assume these loans are for luxury cars, but this is not true. In fact, almost 74% of these loans are for non-luxury models, including popular trucks like the Ford F-150 and Chevrolet Silverado 1500.
Five years ago, loans with payments over $1,000 made up only 5.4% of the market. The global chip shortage during 2021 and 2022 caused many car manufacturers to focus on producing more expensive models. This led to higher vehicle prices and greater amounts borrowed for loans.
Today, the average amount borrowed is an all-time high of £43,952, while monthly payments have climbed to an average of £770. However, some people are struggling to keep up with payments. Currently, about 2% of loans are more than 30 days overdue. Despite this increase, delinquency rates are still lower than in 2018.
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