Over the past year, the automotive industry has been experiencing drastic changes concerning escalating loan terms and leasing contracts becoming more popular. With vehicle prices increasing, consumers are opting to have longer loan terms–the average now being 5.5 years–and therefore end up paying more interest in the long run, and decreasing the potential value of a future trade-in. The average amount financed was up nearly $1000, reaching a record-high of $27,600, with an average monthly payment of $474 Leases are also becoming more popular, with more than 25% of all new vehicles sold being leased.
Also, the average consumer credit score for new car loans is lower, down to 714 fro 721, and this may be the reason why consumers are able to obtain a car lease or a car loan much easier in 2014 than in 2013. We can conclude that more people with lower credit scores are leasing vehicles and taking more time to pay back loans on cars that are more expensive.
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