WASHINGTON–More than eight-in-10 new cars are now being financed and it appears the trend will only continue to grow.
Dr. Eliot Eisenberg, better known as the “bow-tie economist” who is a frequent speaker to credit union audiences, said new data show that during the first quarter of 2019 85% of all new vehicles were financed, up from 76% just a decade ago. The figure includes leases. In addition, 32% of new car loans were for terms of six or seven years; ten years ago that figure was 12%, Eisenberg, said.
“Thus, 33% of car buyers now roll debt averaging $5,000 from their old car into their new one, up from 25% before the recession,” wrote Eisenberg on his blog at Econ70.com. “Why the financing? The average new car costs $37,265, 60% of median family income.”
As CUToday.info recently reported here, new data from Swapalease.com’s latest Lease Trends Report show that a year ago the average lease payment was listed at $474.80. Today the number is $506.13, an increase of 6.8% on payment threshold.
What’s more, a year ago nearly one-in-five people said they would look for a payment between $200 - $299, but a year later that percentage has slipped to just 12%. Furthermore, the $500-$599 payment category saw the largest year over year jump, from 10.7% to 19.2% today.