Average Auto Loan Amount Grows, Delinquencies Remain Stable
Influenced by rising transaction prices and consumer preference for larger, more expensive vehicles, the average new-vehicle auto loan payment has reached $609.
This amount is up 14.4% compared to the same quarter in 2019. The average new-vehicle loan amount financed is now $37,280. While loan amounts are rising, delinquencies remain flat, below pre-pandemic levels. This is a good sign that indicates consumers are managing larger payments without issue. It also allows lenders to continue offering attractive rates to buyers with good credit scores.
The average used-vehicle loan for Q3 of this year is $25,909. This amount is up 8% from last year, and 26% from the same quarter in 2019.
Vehicles Damaged by Hurricane Ida Appear on the Market
Enterprising scammers are taking advantage of high used-car prices and a surfeit of flooded vehicles left from Hurricane Ida.
Through a process known as title washing, a seller can re-register a vehicle and remove its title history from most records. These sellers can pay to make cosmetic repairs to flood-damaged vehicles, then sell them for a sizeable profit. This is a problem when these vehicles end up in a dealer’s hands.
If a customer unknowingly purchases a flood-damaged vehicle, it might run fine for a while. But as these vehicles are rotting from the inside out, it won’t be long before problems appear. This will not only cause the customer to return to the dealership for compensation, but it will very likely damage the dealer’s reputation as the customer spreads the news throughout their network.
Dealers need to be extra careful when examining used-car acquisitions as more Ida vehicles enter the used market. Paying careful attention to a vehicle’s history report – checking for gaps in ownership, registration, and mileage disparities – and instructing technicians to look for water damage and abnormal corrosion can go a long way in saving a dealer’s reputation.
John Paul Strong
John Paul Strong combines his two decades of automotive marketing experience with a team of more than 140 professionals as owner and CEO of Strong Automotive.