On the Money

Car payments and loans jump amid surging demand for cars, SUVs

Key Points
  • During the third quarter of 2018, the average new car monthly payment accelerated to $530, with the average used car loan payment at $381, Experian data show.
  • Experian says 20 percent of borrowers are taking out loans of $50,000 or more.
Auto loans
VIDEO1:2501:25
Auto loans

While gas prices have been falling, the cost of monthly car payments keeps climbing.

During the third quarter of 2018, the average new car monthly payment accelerated to $530, with the average used car loan payment at $381. According to Experian Automotive data, both figures are at record highs.

The average car loan is now just under $31,000. However, Experian says 20 percent of borrowers are taking out loans of $50,000 or more.

"If you`ve been out of the market for five or six years, then these numbers can be surprising," Melinda Zabritski, Experian's Director of Automotive Credit told CNBC's "On the Money" in a recent interview. "And they`re certainly not going to go down."

The richer price tags haven't yet dissuaded consumers. Despite higher payments, larger vehicles including pickup trucks, SUVs and crossovers remain in high demand. Meanwhile, U.S. auto sales are on track to exceed 17 million vehicles for the fourth consecutive year.

A Jeep logo of Italian-American Fiat Chrysler company is pictured on a car at a car dealer on January 13, 2017 in Turin, northern Italy. The United States on January 12, 2017 charged Fiat Chrysler with using software on its trucks to evade emissions standards on about 104,000 vehicles, an accusation the company immediately denied.
Marco Bertorello | AFP | Getty Images

Zabritski told CNBC that those taking out car loans "don`t represent a huge portion of the market, but they are definitely the area we see the most growth. These loan amounts that are over $50,000 and even over $70,000."

It raises the question of exactly who is borrowing $50,000 or more to buy a new vehicle. According to CNBC's Phil LeBeau, it's " those with the best credit rating. The super prime and prime credit rating customers. That is one of the fastest growing segments of the auto loan market."

On the other end, he explained, "those with the poorest credit records, they are pulling back, not borrowing as much." Loans to that segment of the market have hit their lowest in 11 years, he added.

Meanwhile, Americans seem to be signing up for longer terms to repay those larger vehicle loans.

"The average is just under 70 months, and it's not uncommon for people to take out six-and-a-half and seven-year loans," LeBeau said.

On the Money airs on CNBC Saturdays at 5:30 am ET, or check listings for air times in local markets.