New data shows that in countries where heavy-duty trucks are important, pickups and SUVs account for the lion’s share of auto loans with high monthly payments of $1,000 or more.
Experian Automotive analyzed more than 5 million auto loans and leases opened in the first quarter and found that nearly 19% of new car loans included monthly payments of at least $1,000. This is an increase from approximately 17.4% compared to the same period last year.
“People think it’s all luxury, highline, but that’s not really the case,” said Melinda Zabritsky, director of automotive financial insights at Experian Automotive.
Almost 74% of auto loans that require owners to make monthly payments of $1,000 or more are for non-luxury models, with the top five models being popular pickup trucks; ford According to Experian, the F-150, Chevrolet Silverado 1500, and Ram 1500.
Just five years ago, only 5.4% of the market had car loans with monthly payments over $1,000. Then, a global chip shortage hit from 2021 to 2022, and automakers around the world prioritized production of more profitable high-end models. Vehicle prices have soared, and so have car loan amounts.
Zabritsky said these price increases have changed the way car and truck buyers look at what it takes to finance a new vehicle.
“We haven’t seen any reduction in MSRP or high-end financing yet,” she told CNBC. “I think over time more consumers are getting used to paying $1,000.”
According to Experian Automotive, the average loan amount is now at an all-time high of $43,952, and the average monthly payment is also at an all-time high of $770. Both reflect the relatively strong emerging auto market.
Regarding car loan delinquencies, the proportion of loans that are 30 days or more past due has risen to 2% of all new car loans, and the 60-day delinquency rate is also rising.
Still, Zabritsky noted that delinquency rates remain below 2018 levels.
“The driving force behind the 60-day delinquency is really the subprime market. The lower the credit score, the higher the chance of default,” she said.
