US Spending On New-Car Purchases Hit All-Time High In May 2015
As loan terms continue to stretch further into the future, spending on new-car purchases hit a new all-time high in May 2015.
Consumers spent a record $52 billion on their vehicles of choice, The Detroit Bureau reports, with help from a decline in incentives compared to the same time in 2014. The average transaction price climbed 4 percent in May 2015, as well, coming to $32,452 on a new vehicle.
Meanwhile, premium brands saw the biggest boost over the first four months of this year, with sales climbing 10.8 percent over last year; mainstream brands saw only a 4.8-percent gain in comparison.
The all-time high came from a two-pronged collaboration of incentive reduction — only General Motors, Hyundai, Kia and a few others kept their incentives — and an ongoing surge in truck, SUV and large sedan sales, the latter the result of falling fuel prices.
As for how consumers are paying for their increasingly expensive purchases, most are signing loan contracts with terms averaging 67 months. This allows consumers to pay for their new ride without breaking the bank, but also locks them into their chosen vehicle for a good while, lest they find themselves underwater come trade-in time. The latter point also suggests a potential slowdown in sales down the road.
Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.
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That dealership is in my town! They have now changed ownership, and they tore down the building with the sloped roof for better use of their space. Having inherited my car from my grandma, I have never had a car payment. I'm not looking forward to that day as I still have student loan payments...
The longest car note I had was 36 months, which I paid off early. I'm 7.5 years into owning the car and feel like i'm only 50% through with it.
I took 36 month loan on my 30K Fusion Titanium purchase last year. But I paid off loan after three month and own vehicle. The main reason I took loan was to get $500 discount, they told me that have to keep loan at least for few month. So people taking long term loans does not mean that they will wait until the end of loan, they may pay back within months.
I paid off a loan early within few months car in TC not my fault. Bought extented warranty too. Never again you can get unlucky and it evaporates.