Get the app
Get the app

Join millions of investors on Stash

Investing, simplified

Start today with as little as $5
Get the app
Money News

Beep, Beep! Don’t Lose Sleep Over Car Loans

October 09, 2019
aerial view of highway with cars

3 min read

U.S. consumers are reportedly paying more than ever for their cars, and they’re racking up record amounts of debt to make their purchases.

That’s according to a new report from the Wall Street Journal, which says the average car loan has climbed to $32,000, about a third higher than it was ten years ago,  while the average loan is held for 69 months, or nearly seven years.

Meanwhile, car dealerships have more incentives to offer loans, as dealers reportedly make more than twice as much money from financing a car than the sale itself, also a shift from a decade ago. Banks that originate the loans for a dealer typically offer a percentage of each new loan, according to reports.

On average, dealerships make nearly $1,000 on financing each new car,  compared to less than $400 for the sale. That’s a reversal from a decade ago, when dealers tended to make about $800 on average sales, and about $500 from financing, the WSJ says.

Consumer debt, including car, credit card, and student loans, has increased to about $14 trillion as of the second quarter of 2019. That also marked the  20th straight quarterly increase of consumer debt, according to the Federal Reserve Bank of New York.

Why are cars getting so expensive?

The car industry has changed in recent years, as consumers have opted for bigger and costlier SUVs, rather than smaller and relatively more affordable passenger cars. The car industry is responding to changing market dynamics.

All three of the largest U.S. automakers, including Fiat Chrysler,  Ford, and General Motors,  have slimmed down their production of passenger vehicles in recent years, according to Bloomberg. And SUV sales are expected to make up more than 50% of the U.S. car market by 2020, up from 35% in 2018, according to reports.

Meanwhile, the average cost of a mid-size SUV is about $33,000. The average cost of a new mid-sized passenger car is $25,000. And the average cost of a used car is about $20,000, according to recent data.

Some of the possible reasons for increased car prices include the trade war, where tariffs on imported goods like metal and electronic parts could be adding as much $1,300 to car prices, as well as the ever-increasing cost of new technology powering many standard car features.

Borrowing basics

Here are some things to keep in mind before you borrow:

You can find out more about credit scores and credit utilization here.

Welcome to your new financial home.

Start today with as little as $5.

Get the App

Make saving and investing a habit.

Go automatic with Auto-Stash.

Start now

Make saving and investing a habit.

Go automatic with Auto-Stash.

Start now

By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

Investment Profile

Bonds Worldwide

An International Bond ETF on Stash

Learn more
Explore more articlesChoose a topic to learn more about
social media market news politics Careers Technology

This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented. Before investing, please carefully consider your willingness to take on risk and your financial ability to afford investment losses when deciding how much individual security exposure to have in your investment portfolio.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit