#new car loan
Average new car loan is now 66 months
When it comes to new-car loans, many people are gravitating towards loans that extend over increasingly long periods of time. What they may not realize is that those loans could be dangerous to their finances.
According to a recent report by Experian Automotive. the average new car loan in the first quarter of 2014 was 66 months, a month longer than the average over the same period in 2013. And nearly 25 percent of loans were for 73 to 84 months. We’ve even seen some financing companies offer car loans of as long as eight years.
Why the attraction to longer loans? Because they result in lower monthly payments. That encourages you to buy more car than you may be able to afford. And car dealers get excited when they can get customers to focus on the low monthly payments instead of on the fact that their new car is costing twice as much as their parents paid for their first house. But this mortgagelike approach to auto financing has serious downsides, which is why we don’t recommend buying a car that requires a loan of more than 48 months.