The average size of a loan for a new car in the U.S. set a record in the first quarter as did the average payment.
Database firm Experian notes U.S. Monthly Auto Payments Reach Record High in First Quarter.
New vehicle loans averaged $31,455
The average monthly payment for a new vehicle hit at record $523/month
Consumers are lengthening loan terms, with six years being the most common, to adjust to the higher costs and rising interest rates.
Outstanding loan balances reached a record high of $1.108 trillion
Loans for used vehicles reached $19,536, also a record
$523 * 12 * 6 = $37,656
That total does not factor in the down payment.
Interest = $37,656 - $31,455 = $6,201.
That's $1033.50 in interest annually.
At the end of six years, perhaps the car will fetch $5,000 in a trade-in, but everything depends on miles, damage, and of course advancements in self-driving.
Anyone trading the car in after three or four years will be hugely underwater.
"The dream of owning a new vehicle is becoming more elusive," said Melinda Zabritski, senior director of automotive financial solutions at Experian.