Experian: Subprime Financing, Delinquencies To Grow in 2014, 100 Month Terms Coming Soon
Just over five years after the Great Recession tightened consumer lending standards on everything from cars to houses, Experian Automotive is forecasting growth in the subprime market for 2014, including longer loan terms and increased delinquencies.
Automotive News cites Experian Automotive Senior Director of Automotive Credit Melinda Zabritski as saying that most vehicle financing is still in the prime lending market, butthe subprime market continues to grow as more lenders return to the space vacated en masse back in Q3 2008. Whether the market continues to grow depends on how many of those loans go into delinquency, though Zabritski expects a modest increase in delinquencies this year in comparison to the run-up to Q3 2008 beginning in 2007.
As far as the length of those loans are concerned, she sees 72-month terms becoming common as lenders compete for business while consumers negotiate for favorable monthly payments. The average term loan currently holds at 65 months, but Zabritski sees that average steadily climb as more 72-month loans are made with no sign of stabilizing five years forward, and terms over 100 months emerging soon.
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How upside down would a 750 i buyer be after 4 years? Yikes!
100 month car loans? Great, just like South America. Next they'll be shipping us container-loads of used parts from overseas stolen cars. Now all we need is a benevolent dictator to promise great things to the masses while the elite few get richer and richer. Oh, right. Never mind that last bit.
I'm not sure if anyone in Norway has ever bought a brand new car for cash, but if they did, they were probably lottery winners. A 7 year loan on a new car is completely normal. 3-5 years is more normal for a 6-7 year old used car, but banks prefer that you have finished paying down the car before it's 13 years old. (the average car on Norwegian roads is more than 10 years old) But, offcourse, a new golf starts at 40K,a stripper Mondeo at 45k, a euro Accord (TSX)starts at 65k...same as My '07 CRV cost when it was new, I bought it in December for roughly half of that.But that is about half of what I make a year before tax, unless I get a lot of overtime, and my job pays below average... I guess what I'm saying is, if the average age of cars rise, and used car prices go up, there is little risk in it for the banks to give people longer terms. With interests they make money no matter what.
Carrera, glad to hear its temporary. Doesnt sound like its easy to hold on to your money in Canada.