[Oct 25, 2010.]
Cheap auto loans plentiful
Bloomberg Businessweek reported earlier in October new figures from the Federal Reserve and CNW Research that suggest that lenders of auto loans have been relaxing their lending criteria over the last three months, allowing many more people--including those with poor credit--to buy new and used cars.
Indeed, the proportion of new vehicles sold to those with sub-prime credit (that's those with a FICO credit score below 619) jumped from 5.7 percent in 2009, and 6.8 percent during the first three quarters of 2010, to 9.9 percent in September. And a recent survey conducted by the Fed among senior loan officers in big banks showed that these institutions--as well as auto loans specialists and dealerships--are increasingly willing to lend to consumers.
Vehicle sales soar as originations of auto loans rise
Meanwhile, WHIO News Talk Radio of Dayton, Ohio, said October 15 that originations of auto loans were up 19 percent in September compared with the same month in 2009, the biggest rise since the recession hit at the end of 2007. This fueled a 29 percent jump in vehicle sales across the country during September.
The station put down the rise in auto loans to a warmer economic climate, greater confidence among lenders, and the many American consumers who've been using the last few years to repair their creditworthiness.
Cheap auto loans may not last?
The last edition of this blog warned that the new supply of cheap auto loans could dry up as quickly as it appeared. And that possibility grew October 21 when The Wall Street Journal provided new numbers from Fitch Research about delinquencies.
Apparently, losses on asset-backed securities based on prime-rated auto loans rose to an annualized rate of 0.9 percent in September. That's 34 percent up over the quarter, though still substantially down compared with the same period last year.
Average auto loan balance $14,873
On average, American consumers owe $14,873 on their auto loans. That's one of the least scary in a list of horrific statistics included in a book review carried by USA Today October 24. Other debt figures that the average consumer owes include $7,701 on credit cards, $177,186 on mortgages and $27,777 on student loans.
Further worrying numbers that remind us of just how damaged our economy was--and to some extend still is--by the downturn include:
There are more Americans surviving on food stamps than there are in collegeA mortgage foreclosure notice was issued once every 11.2 seconds throughout 2009At the beginning of 2010, there were 5.5 people looking for work for every job vacancyShop around for the best auto loans
If you're concerned that the economy isn't strong enough to sustain the current ample supply of cheap auto loans, you may want to buy that car you've been promising yourself now. If so, why not get competitive auto loan quotes here?
About Author:
Peter Andrew has been writing about -- and for -- business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.
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