Cars Costs Growing, Salaries Not; Americans Are Going Deeper Into Debt to Buy Cars

Washington DC July 5, 2017; The AIADA newsletter reported that car buyers are going deeper into debt and for longer periods of time as they reach to buy more expensive new cars.

CNN Money wrote that the average car loan last month stretched out for 69.3 months, or nearly six years, according to Edmunds.com. That's the longest average loan term ever recorded since Edmunds.com began tracking the statistic in 2002. Based on industry trends, it's very unlikely that it has ever been higher. The long loans are a sign of consumers' confidence in the economy and their belief they will be able to pay up, Edmunds.com analyst Jessica Caldwell said. But they're also driven by the allure of crossover SUVs, which cost more than cars, and by all the tempting new technology features cars now offer.

"You can still get a perfectly nice compact car for under $20,000," Caldwell said. Not as many customers want those, though, especially with gasoline prices at historic lows. For more on rising vehicle debt, click here.