The average car loan is a statistical measure that represents the typical amount of money borrowed by consumers to purchase a vehicle. It is calculated by dividing the total amount of car loans originated in a given period by the number of loans originated during that same period. For example, if $100 billion in car loans were originated in a year and 10 million loans were made, the average car loan would be $10,000.
The average car loan is an important metric for several reasons. First, it provides insights into the overall health of the auto lending market. A rising average car loan may indicate that consumers are taking on more debt to purchase vehicles, which could be a sign of financial stress. Conversely, a declining average car loan may indicate that consumers are becoming more cautious about their spending, which could be a sign of economic weakness. Second, the average car loan can be used to compare lending practices across different lenders. Lenders that offer lower average car loans may be more attractive to consumers who are looking for a good deal on a car loan. Third, the average car loan can be used to track changes in the cost of borrowing over time. A rising average car loan may indicate that interest rates are increasing, which could make it more expensive to purchase a vehicle. Conversely, a declining average car loan may indicate that interest rates are decreasing, which could make it less expensive to purchase a vehicle.