According to TransUnion, consumers now owe $1 trillion on their car loans, the first time the threshold has ever been broken. The loan balances have been driven up by a combination of three factors—strong car sales, rising car prices and low (and competitive) interest rates. In fact, borrowers with top credit scores can get loans with rates as low as 3%. The average amount borrowed is about $21,700, and buyers owe nearly $18,000 on average.
While the overall loan total has grown, low interest rates and longer loan terms have kept the average monthly payment fairly consistent over the past five years. The average monthly payment for consumers’ stands at just under $400.
Even with $1 trillion in outstanding loans, analysts say only about $9 billion of loans are 60 or more days past due, which represents less than 1% of the loan volume. Such a low delinquency rate is better than the delinquency rates for mortgages and credit cards.