Prices of new and used vehicles are at record highs, bolstered by a semiconductor supply crunch that has kept a lid on car production just as consumers are itching to get out and shop for them, the Wall Street Journal reported. Used cars and trucks were 45.2% more expensive in June than they were a year earlier, while new cars were 5.3% pricier, according to the Labor Department. Monthly payments don’t look all that different to consumers, though, thanks to lower rates, longer terms, or putting up more cash. For new cars, average monthly loan payments increased just $7 in the first quarter of 2021 compared with a year earlier, according to consumer-credit reporting company Experian. Monthly loan payments for used cars rose $19, or 5%, in the same period. Loan durations had been getting longer even before the pandemic. The average length of an auto loan was 70 months for new cars and 68.9 months for used cars in the second quarter, according to data from Edmunds; 10 years ago, they averaged 64 months and 62 months, respectively. Much of that happened as competition grew among lenders and as car prices gradually increased, with auto makers adding new technology and customization options on vehicles. Longer payment terms were designed to make vehicles look more affordable.
