Part of the overall growth in auto debt comes from consumers’ shifting preference for larger, more expensive vehicles such as trucks and SUVs instead of sedans or compact cars. The average price of a new vehicle is now about $37,100, compared with $27,573 five years ago, according to auto research firm Edmunds.
For consumers — the bulk of whom finance their purchases — that means higher balances and loans that stretch longer. As of January, the average amount financed was $31,707 and the average loan length had reached 69.1 months, up from 61 in 2010, according to Edmunds.
Rising interest rates also make the cost of borrowing more expensive. The average rate on an auto loan is roughly 6.2 percent, compared with 5 percent a year ago. However, the lower a consumer’s credit score, the more they can expect to pay in interest — even in the double digits.