Though the calendar is about to change to 2014, it appears to be 2007 all over again in dealer lots and showrooms nationwide as a record number of auto loans with low interest rates were signed during the third quarter of 2013.
According to Experian, the average amount taken out for a new car loan this quarter was $26,719, the highest amount financed since the start of the Great Recession in 2008. As a bonus, each loan for a new car holds an interest rate average of 4.27 percent; used car loans, on the other hand, hold an average rate of 8.63 percent.
Reasons for the record loan amounts include the rising cost in new cars overall due to buyers adding extra content and features that best suit their needs and wants, as well as interest in luxury vehicles, whose sales have gone up 11 percent this year due to leasing programs feeding fuel to the fire.
In exchange for taking out huge loans, consumers are opting to stretch out their notes for as long as possible to keep payments low; the average payment in the third quarter of 2013 is $458. Around 40 percent opt to pay off their loan for 65 months, while 19 percent choose to spend anywhere from 73 to 84 months doing the same.