Average new-car loan a record 65 months in fourth quarter
Auto lenders gave borrowers a record 65 months, on average, to repay new-car loans in the fourth quarter, credit-tracking company Experian said on Tuesday.
The average term for new-car loans was up from 63 months a year earlier. For loans on used cars, the average term was unchanged at 60 months.
The new-car loan term record came as lenders continued to finance more subprime borrowers. Subprime borrowers took 43.2 percent of all car loans, the most in any fourth quarter since 2007 and nearly seven percentage points more than in 2009, according to Experian.
Banks and finance companies have been generally easing standards for car loans over the past three years. The shift has followed lower-than-expected losses on car loans during the financial crisis and increased competition among banks and debt investors for interest income.
The longer terms have come as interest rates have declined. The average interest rate for a new-car loan dropped to 4.36 percent in the fourth quarter from 4.52 percent a year earlier, and the average monthly payment fell to $460 from $468, according to Experian.
Experian is a unit of Experian Plc .
(Reporting by David Henry in New York; editing by John Wallace)