Besides Design, Technology And Price Wars, Long-Term Loans Driving Sales

There are just a few ways consumers are pushed into new car showrooms. Its 

due to a new design, price wars, consumers seeking the latest tech features 

or the need to replace an aging vehicle. However, Experian Automotive says 

cheap payments are driving loans due to 1 in 4 customers in the first quarter

stretching new-car loans from 60 to 72 months up to 73 to 84 months, up 27.6 




percent from the  first-quarter 2013. Buyers are financing bigger notes than 

ever, with the average in the first quarter hitting a record $27,612, up nearly 

$1,000 from a year earlier, the company says. The average monthly payment 

for a new-vehicle loan was a record $474 in the first quarter, up from $459 in 

the same quarter in 2013.  One of the major downsides of stretching out the 

loan is that midway through monthly payment cycle consumers may have the 

urge to trade out of the vehicle, leading to an upside down situation where the 

vehicle is worth less on the used car market than the actual amount of the loan 

value.



So, before stretching out the loan, consumers are urged to consider stepping 

down to a less expensive vehicle or better yet, consumers should consider 

flopping down a larger down-payment to rail back the length of the 

loan. Leasing, which typically offers a lower payment, has 

also triggered consumers to seek more manageable payments. 

The downside to leasing is that ownership never occurs and consumers are 

faced with a mileage restriction.


From The Detroit News: http://www.detroitnews.com/article/20140825/AUTO01/308250034#ixzz3BPJWCvsj