Jamie Dimon Warns About Auto Loans As They Hit New Record Highs

CNBC featured a short segment looking into auto loans. The U.S. has set a new record “for borrowing more, and taking longer than ever to pay for a new vehicle.”

According to Experian data, for the first time in history, the average auto loan has surpassed $30,000, the average monthly payment has reached $503, the average length of an auto loan has hit a record of 68 months, and an increasing number of subprime borrowers are taking loans to purchase new cars. This means that, on average, Americans buying a new vehicle today would finish paying it off in 2022.

CNBC's Jon Marino added that, in May, the total amount of auto loans beat the $1 trillion mark for the first time ever, up 10 percent, as auto sales lingered around record highs.

Interestingly, JPMorgan Chase & Co. (NYSE: JPM)’s CEO Jamie Dimon spoke about the auto loans issue at the AllianceBernstein Strategic Decisions Conference in New York on Thursday. He pointed out that the “auto is clearly a little stretched,” and warned that someone would get hurt by this situation.

Melinda Zabritski, Experian's senior director of automotive finance, also weighed in on the topic.

“The continued rise in new vehicle costs have kept many consumers exploring options to keep their monthly payments affordable… As long as vehicle prices continue to rise, we can expect leasing rates to grow along with them. However, consumers need to understand the nuances of their lease agreements and make sure that leasing fits their lifestyle,” she concluded.