- The average new-vehicle loan term in March was 70.6 months, the longest ever, according to a new research report.
- Loan lengths have been steadily climbing in recent years alongside the price of new vehicles.
- Average monthly payments also rose, hitting $573. In March 2019, average monthly payments were $553.
Loan lengths for new-car purchases have been relentlessly charging forward, getting longer with each month. And now in March, according to research from Edmunds, the average loan term hit 70.6 weeks—nearly six years—the longest on record.
Just as the loan length increased, so did average monthly payments, which hit $573. Back in October, the average loan length was 69 months, and monthly payments then averaged $550. The price of a new car has been consistently climbing, and as of April of last year had climbed 29 percent over a decade earlier.
Beginning in the middle of last month, automakers began rolling out zero percent interest for loans up to 84 months for buyers with top-tier credit history. Nonetheless, according to Jessica Caldwell, the executive director of insights at Edmunds, said in a statement that not many buyers got to take advantage of such offers.
“Vehicle purchases made in March—particularly the second half—were likely need based,” Caldwell said. “These shoppers might not have necessarily qualified for zero-percent finance offers but still needed a car in spite of everything else going on in the world.”
As cars have gotten more expensive and loan terms lengthened, more buyers have had negative equity—they still owe money on a previous vehicle when they purchase a new one—than ever before, according to Edmunds. In the first half of 2019, one-third of new-vehicle buyers fell into this category, while a decade ago that number was 19 percent.