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Average Used Car Payments Exceeded $400 Per Month In Q4 2020

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Buying a pre-owned vehicle is generally cheaper than going new, but according to a new report, even they are getting more expensive, which in turn is pushing up used car payments. In fact, recent used car purchasers are now paying more than they ever have, with monthly loan balances pushing past $400 per month for the first time ever in the fourth quarter of 2020.

That figure was part of a recent report released by Experian, one of the world’s top credit reporting agencies, about the state of the American automotive finance market at the tail end of last year. Used car payments averaged a stout $413 per month during the last three months of 2020, up from $395 in 2019 and $381 in 2018. The average terms of those loans increased as well, to just under 66 months, which itself was a record high.

Why are used car payments rising to previously unforeseen levels? Blame COVID-19, which disrupted nearly every facet of the automotive industry last year. As Ford Authority previously reported, prices increased for new and used cars throughout 2020, as production shutdowns brought on by the pandemic pushed buyers into the pre-owned market, which in turn caused the prices of those vehicles to jump.

Unfortunately, the factors responsible for those trends don’t seem to be letting up in 2021, as the ongoing semiconductor chip shortage has stymied Ford and other automakers for months now, a crisis that might end later this year, according to CEO Jim Farley.

The good news for Ford enthusiasts looking to take on a fresh round of used car payments is Ford Blue Advantage, the all-new used car platform that Ford launched earlier this year. The sales tool comes with several built-in perks designed to make shopping for a used car more painless than before, with at-home test drives, home delivery, and a four-day 200 mile return policy. Additionally, every vehicle on the platform comes with a warranty.

We’ll have more on the state of the new and used car markets soon, so subscribe to Ford Authority for the latest Ford business news and continuous Ford news coverage.

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Ed owns a 1986 Ford Taurus LX, and he routinely daydreams about buying another one, a fantasy that may someday become a reality.

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Comments

  1. NCEcoBoost

    And new (non-lease) payments exceeded what? $1,000? Prices across-the-board are OUT OF CONTROL and this will not end well for Ford and the rest.

    Reply
  2. FRED MOLLER

    We’ve been paying $600+a month for our 2017 Hyundai Tucson from the get go for 4 years now, up here in Canadastan, so what is the point that you are trying to convey?

    Reply
  3. Motorpsychology

    $413/mo is exactly ten times the payment on my fist car: 1963 Plymouth Belvedere Sport Coupe (2dr hardtop) $41.30/mo, 24 mos. I’d pay those terms again today if I could get that car again!
    The other side of the coin is that there are more people running their cars over 200,000 miles/14+ years, thus staying out of the market longer. Once this becomes the norm, demand for both new and used cars will drop, and payments will follow. Also we will reach a saturation point where enough people are “upside down” in their loans (owing more than the vehicle’s market value) that they cannot carry their current balance owed on the next vehicle.

    Reply

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