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Average monthly car payments fall as loan terms reach record lengths

November 23, 2010
The average monthly new car payment dropped from $466 a month for cars sold in October 2002 to $447 per month for cars sold last October, according to an online automotive information source, "Ironically, this trend does not reflect lower transaction prices or lower loan amounts, both of which rose during the last year," said Jane Liu, executive director of data analysis for "Instead, the lower payments came about because the average financing has stretched from 59.6 months last year to over 62 months this year. "Over 38% of last month's new car buyers took out loans for terms exceeding 60 months, as compared to only 24% of car buyers in October 2002." In October 2003, the average car loan amount was $23,801, an increase of 0.9% from the previous October's $23,656. And the average finance rate rose from 5.46% in October 2002 to 5.63% in October 2003. So, taking into the increased term lengths this year's new car buyers will pay an average of $285 more in interest. New car prices are rising from month to month as well. From September to October 2003, the New Vehicle Price Index rose a remarkable 1.68 percent, to 99.8 percent (base = 100 set in January 2002), which corresponds to an annual rate of over 22 percent. The data reflect price shifts for the industry as a whole and can be analyzed by different market segmentation. Similar to the Consumer Price Index, the Edmunds Price Index for new vehicles (EPI-N) measures the average changes in retail prices for a fixed basket of new vehicles with fixed options over time for the purpose of trend analysis. The index notes all of the manufacturers' various U.S. incentives programs, including subvented interest rates and lease programs as well as cash rebates to consumers and dealers. also analyzes transaction prices and net prices by country of origin, manufacturer, make and model, reflecting manufacturer-to-consumer rebates, including low APR and special lease programs.