Automotive loan terms kept falling in the fourth quarter of last year for both new and used vehicles, according to Experian.
The average term for new models fell from 69.3 months to 67.9 while the average for used vehicles fell from 67.9 months to 67.4.
But the average monthly new-vehicle payment rose year-over-year from $720 to $738 while the average for used models was about flat at $532.
“With interest rates remaining at elevated levels, it’s natural to see consumers continue to opt for shorter-term loans,” said Experian Head of Automotive Financial Insights Melinda Zabritski.
“While consumers may spend more on their monthly payment, the overall cost of a vehicle is much lower. As the market continues to change, lenders and dealers need to watch the trends carefully to properly assist in-market shoppers.”
The average new-vehicle interest rate after a long cycle of rate increases last year was up from 6.1% to 7.2%, Experian said, while the used-vehicle average rose from 10.4% to 11.9%.
Captives’ share of the new-vehicle loan market jumped in the quarter from about half to 61% as banks and credit unions shares fell to 20.4% and 12%, respectively. For used models, credit unions kept their lead at about 30% as banks’ share fell slightly to about 27% and captives’ share increased from about 8% to about 10%.
