Citing data from Experian, CNBC reported that the average cost for monthly auto loans have risen to almost $600.
We went up higher amounts year over year in 2020 than we ever really have before and hit record highs in loan amounts and record highs in payments.
Melinda Zabritski. Senior director for Experian’s automotive financial solutions team.
Experian’s financing report notes a boost in vehicle sales in Q4 of last year, but is still way down from 2019 at the same time.
The average price for those taking out a new loan was over $35,200 on average. This is almost a $2000 increase from the year previous. This has resulted in monthly loan payments rising to $13 on average, to a high of $576.
Used vehicles also saw all-time highs. Over $24,400 on average was borrowed, which was up almost $1,700 year over year. Monthly payments on used car loans increased to an average of $18, to $413 in total. This is the first time loans have exceeded $400 on used vehicles.
I can certainly remember when that ($400) was the average payment for a new car. Those days are gone. We’re certainly over $400 and don’t expect to see that come down.
Melinda Zabritski
CNBC attributes this to rising vehicle costs which few would have not predicted years ago.
According to the report, For new vehicles, the demand for larger and more expensive SUVs and pickups means buyers are willing to pay more. Buyers also are increasingly opting for models with more tech features from infotainment to driver-assist systems that help prevent accidents.
Because of the economic disruptions caused by the lockdowns, used car and truck sales rose in much greater demand. The used vehicle car market was already strong, says Zabritski, where around 40 million used vehicles were purchased last year.
The report does note, however, consumers defaulting or falling behind on payments have decreased and remains under the historical average.
Most of the lenders I’m talking with and have had discussions with since the middle of last year have all said that they’re not seeing the delinquencies that they expected to see. So consumers have done a good job of staying current and keeping those payments going.
Zabritski
AUTHOR COMMENTARY
The rich ruleth over the poor, and the borrower is servant to the lender.
Proverbs 22:7
[1] This know also, that in the last days perilous times shall come. [2] For men shall be lovers of their own selves, covetous, boasters, proud, blasphemers, disobedient to parents, unthankful, unholy, [3] Without natural affection, trucebreakers, false accusers, incontinent, fierce, despisers of those that are good, [4] Traitors, heady, highminded, lovers of pleasures more than lovers of God; [5] Having a form of godliness, but denying the power thereof: from such turn away.2 Timothy 3:1-5
I am reporting on this because it demonstrates that Americans are addicted to spending what they do not have. Yes, they maybe making payments on time, but I attribute that to the stimulus checks, state and federal unemployment benefits from the Covid “relief” packages, ‘normal’ unemployment, and PPP loans. I don’t know about you, but when the CARES Act was signed in, I saw more new vehicles on the streets than ever before! Not to mention I saw tenants who could not be evicted going out and “buying” new vehicles and flat screens. Did you see what I saw?
Prices will continue to inflate as they have been across numerous sectors, and people are still going to shop till they drop. When the mega market bubbles pop by years end or into 2022, these people will be toast!
Also, leave it to the “experts” to not see higher prices coming. It is real simple: when more debt is created, imports rise, GDP is surpassed by debt, losing astronomical amounts of jobs each week, and more money monopoly printed out of thin air: what did you think was going to happen? Certainly not getting any cheaper.
As I have been stating in other reports, stop wasting money on dumb stuff. Be frugal, and when you do spend the money, do it wisely and spend it on stuff that will aid you in the long run.
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