The credit report folks, Experian have released data which surprised even me. There are whole camps of people out there, typically Dave Ramsey fans, who say they don’t need credit and don’t plan to ever use credit again.
But according to Experian, 84% of people who purchase new vehicles actually do use credit. Credit avoiders can talk a big game but the reality is the world as we know it revolves around credit, revolving or otherwise. People who purchased used cars financed 55% of vehicle purchases.
Working to have a good credit score after a financial mishap is important because at some point in the future, a good credit score comes in handy.
According to Experian, “In most parts of the country, vehicles are viewed as a necessity to everyday life, which is why we continue to see consumers willing to take out larger loans as the average price of vehicles continues to rise,” said Melinda Zabritski, Experian’s senior director of automotive finance. “As more consumers lean on financing, it’s important for them to consider all of the factors involved, including monthly payments, interest rates and loan terms. These insights will enable them to have a better understanding of their potential payment obligation and take the appropriate action in order to make the vehicle fit within their monthly budget and more easily meet payment terms throughout the life of the loan.”
- The average credit score for a new-vehicle loan dropped 3 points in Q4 2014 to reach 712
- The average credit score for a used vehicle loan increased 2 points in the quarter to reach 648
- In the fourth quarter of 2014, the average monthly payment for a new vehicle hit $482 — its highest level on record
- Interest rates for new-vehicle loans crept up in Q4 2014 to 4.56 percent
- Loan terms for new and used vehicles increased from a year ago to reach 66 months and 62 months, respectively
The Experian study shows that the average loan amount for a new vehicle in the fourth quarter of 2014 once again hit its highest level on record, reaching $28,381. This represents a more than $950 increase from a year ago and a $582 increase from the previous quarter. For used vehicles, the average loan amount increased $437 from last year to reach $18,411. – Source
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