As ATPs Rise and Loan Terms Grow Obese, Trade-ins Are Less of a Trade-off

Auto loan terms have been creeping up for as long as anyone can remember. Back in 1997, the average financing period on a new car was somewhere around 54 months. That crept up to over 60 months by 2004 and has only continued to climb. Over the past decade, the typical automotive loan term has ballooned by almost 30 percent. According to an analysis by Edmunds, the average financing period on a new vehicle sold in the United States surpassed 70 months in March of 2020.

While automakers’ recent introduction of loans extending up to 7 years (especially now that COVID-19 is hampering sales) has exacerbated the issue, we were already sitting on a 69-month average in October of 2019. Why would someone voluntarily agree to such a lengthy agreement? They may not have much of an alternative due to similar growth in vehicle transaction prices.

Read more
  • 6-speed Pomodoro I'm not opposed to an EV, but I have no idea what one would have to have or look like to compel me to buy one. The three things I look for in a car are seat comfort, sound, and a stick shift. I generally think I'm waiting for at least the generation after the next generation for engineers to figure out what makes EVs worth driving. That puts us around 2030, so why worry about it? But who knows. Maybe Honda will ace the compact sports EV with an s600amp and pull me in.
  • THX1136 Agree with SCE, the cost alone puts me out of the equation. Would I like an EV Charger, sure but see previous sentence.
  • IBx1 The only thing that stops a bad guy with a [Milwaukee Sawzall for stealing catalytic converters] is a good guy with a [Hydrochloric Acid 37%].
  • SCE to AUX Well, this is one reason to go electric.
  • THX1136 According to carbrain.com the cost for catalytic converter 'repair' is between $945 and $2475. They claim the converter cost itself can be up to $2250. Figuring $880 a unit doesn't seem too far out of line if the carbrain info is accurate. Wonder if gas theft is still going strong on the west coast also?