New Car Buyers Stretching Out Payments

As more Americans go into dealerships to buy a new car or truck, they are increasingly stretching out their auto loans to at least five years in length, and often to six and seven years.


That’s one finding in the latest report by Experian analyzing auto loans written in the second quarter. Experian said the average monthly payments for new and used vehicles bought in the second quarter went up while the average credit score dropped to its lowest level since early 2008.

Overall, the report shows the size and scope of the auto loan market expanding due to a greater availability of credit and more consumers looking to buy a car or truck. (Read More: Subprime Auto Loans are Back, Should That Raise Red Flags?)

Spreading out auto loans

Experian says the average length of a new car auto loan climbed one month in the second quarter and now stands at 64 months. The fact, the average auto loan now stretches out 5.3 years isn’t surprising when you see the shift in the length of auto loans.

4-5 years (down) 19.6%

5-6 years (up) 7.6%

6-7 years (up) 26.4%

How popular are long auto loans? Experian says 58 percent of all new vehicle loans stretch five years or longer. This is the latest indication that the days of three and four year auto loans being the standard for those financing a new car are long gone. In fact, Experian says just over 10 percent of the auto loans are for four years or less in length. (Read More: July Auto Sales Provide Cautious Optimism.)

Monthly Payments Creep Higher

As has been the case for the last several years, the average monthly payment edged slightly higher in the second quarter.

Experian said the average new car loan monthly payment was $452 in the second quarter, up $2 compared to a year ago. The average used car loan monthly payment rose $4 to $351.

In both cases, monthly payments are rising in large part because car and truck buyers are financing a higher amount. The average amount financed with a new vehicle loan is $25,714, an increase of $474. For used vehicle buyers, the average amount financed was $17,433 in the second quarter. That’s an increase of $370 compared to last year according to Experian.

Finally, Experian said the average credit score for new and used car buyers edged lower in the second quarter as credit became easier to find and dealers wrote more loans to those with subprime credit records. (Read More: As Loan Rates Drop, So Do Credit Scores of Car Buyers.)

The average credit score for a new vehicle buyer was 753 according to Experian. That’s nine points lower than a year ago and the lowest score since the second quarter of 2008. The average credit score for used car buyers also dropped nine points, falling to 662.

—By CNBC's Phil LeBeau