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As Interest Rates and New Vehicle Prices Rise, Loan Terms and Payments Reach for the Sky | The Truth About Cars

Image, for a moment, that the trailer pictured above is filled with debt. It’s a good representation of the average new vehicle purchase.

Looking at last month’s stats, you’d have to go back to the safe and comfortable pre-Twitter era to find a January in which fewer people got their hands on a zero percent new vehicle loan. January 2006, to be exact.

Last month wasn’t just a departure from a decade past — the car buying landscape appeared quite different just a year ago, all thanks to rising interest rates and the perpetual upward creep of new car pricing. Data from Edmunds helps break down the differences.

Suffice it to say you’re likely paying a lot more, but you’re spreading it out over a longer term.

Last month, the average new vehicle buyer borrowed $31,707 and financed the vehicle over an average term of 69.1 months. That’s up from 61 months in 2010, and 68 months a year ago.

While a longer term helps get buyers into the vehicle of their dreams, it widens the siphon on their bank account, especially considering the average APR in January — 6.19 percent — was up 1.2 percentage points over last January’s average (4.9 percent). Your average American financed their new car purchase with payments of $551 last month.

Average down payment? $4,191.

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As Interest Rates and New Vehicle Prices Rise, Loan Terms and Payments Reach for the Sky – The Truth About Cars.