Average Auto Payments Spike In Q2

Average Auto Payments Spike In Q2

Purchasing a new or used car is one of the most stressful and time consuming experiences you may have aside from home buying. Sitting in the finance manager's office going over rates and calculations while verifying every aspect of your income and qualifications is enough to make you want to throw up your hands and walk away at any point. It only gets worse when you realize the interest rate you've been expecting is suddenly inflated and your four year financing is suddenly pushed into a six year albatross to meet your monthly budget. 

Q2 of this year is no exception, and while there may have been many extenuating circumstances behind the rise, the average payments for both new used cars increased again over Q1. Experian's Q2 reports show that new vehicle payments rose 4 percent to an average of $525 per month while used car payments increased 3.6 percent to $378. This represents $20 and $13 more per month tacked on respectively. 

Shockingly while prices have risen, the rate of 30 and 60 day delinquent payments have fallen. The percentage may not be staggering, with improvements in 30 day of about .09% and 60 day .03%, but this represents a very counterintuitive trend that is surprising many financial experts. What this represents is a mystery, with some speculating a trend of higher fiscal responsibility and others citing a healthier economic environment. 

"As we monitor the health of the automotive market, delinquencies are one of the most telling metrics. If this downward trend continues, it can be an encouraging sign," Melinda Zabritski, Experian's senior director of automotive financial solutions was quoted. "Moving forward, lenders will want to keep a close eye on car buyers' payment performance. Understanding these trends and leveraging the power of data helps lenders make the right decisions when analyzing risk."

All of these on-time payments are great news for owners, with average national credit scores rising one point to 715 for new vehicle financing and three points to 655 for used. This means that the expected trend in coming financial quarters should reflect this information and interest rates should drop, though it may take time for it to distribute to all lender types. Hopefully the trend will continue, and as the majority of consumers make their payments on time it will filter down and make a more fertile environment for all car buyers as rates become more affordable. 

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Written By: Todd Hendrickson
Source: Automotivenews.com